They 'avoid' taxation by reinvesting the money elsewhere.

For instance: If you sell your house and pocket the money then that is income and your income for that year is your salary + the house sale. That can be taxed as high as 30-40%

If you sold your house and bought another one with the money then you are taxed capital gains. Usually only 15%. If the sale of the house is l as than 30k then there is no cap gains tax.

There are a bunch of loopholes and stuff, yes. But if Bezos were to take all of his 'money' and distribute it as cash then he would be taxed ~40% when he converted it from investments into cash.

It's a tool used to keep money in the markets. Bad things tend to happen when people take all of their money out at once and are still able to make money (Great depression, 2008 recession)