A 5/5 Yi is not the same as a 5/0 Yi. The 5/5 Yi has already given the other team 1500g with his deaths and lost maybe 2-3 minutes of time dead, plus time walking back. Losing gold on death is a double punishment. Other team gets +, you get -. The snowball curve becomes too big, making games uninteresting.

Watever their initial reason for not including it is irrelevant adding gold loss to this game would break it making overly snowbally and overly dependent on early game. The gold loss from not being able to lane and farm or be around to grab kills or assists is sufficient

Dumb mechanic, which only prolongs game, since all dying players are like 'farmfarmfarm lost gold'.