and like: I'm trying to imagine what such a tax rule would be like. functionally, it makes long term investments with a gain liquid up to the initial cost basis what would that change?

it feels like it will lead to less investment since it's easier to take money out, but it might also encourage investment since it's more liquid?

also a savings account based on this would be kinda cool: your money is invested, you can withdraw money any time, and there's a linked investment account that accumulates effectively zero cost-basis stocks (investments with losses would need to be "locked", caveats caveats)

I don't see an immediate reason as to why this would be a bad idea, but I haven't thought it through and I suspect it would be a pretty powerful tool for tax dodging if combined with some loopholes. In itself it doesn't seem like a tax dodge

feels pretty interesting though

it is one a m and this is all I can think about, this is why you don't open twitter after midnight manish

And yeah, retirement accounts have some features which match this, but they have different tradeoffs and because of that there are limits on this.

what I'm hypothesizing here is something that combines roth's ability to withdraw contributions and post-tax traditional's tax liability treatment ("only growth is taxed"), ideally without age/$ limits

This feels a lot like general deferral of income tax on investments, if it's not spent. Why should it be specific to investment income and not available for earned income? Seems like one path here is a consumption tax rather than an income tax.

There are a bunch of good reasons to do a consumption tax rather than an income tax, probably with the progressive rate structure steeper than what we use for income taxes. Forms would work like income taxes today with deductions for saving and additions for loans.