The ability to play on a new account doesn't negate the benefits of permabanning toxic players. If every single one of them did that, then it would at least be a minor punishment, taking away their unlocked skins, icons, champs, and so on. Any who don't do that are removed from the game and the problem is solved in at least those instances. Quite frankly, Riot and 99.994% of the playerbase (people without permabans, according to Riot's figures on this, which I see no reason to doubt) don't give one whit for how permabanned players feel about being ejected from the game for consistently appalling behavior. Most permabanned players stop playing the game. It's extremely rare for a permabanned player to be so oblivious and/or unbalanced that they accumulate multiple permabans on a series of accounts. Riot does not have the wherewithal to prevent that except when a highly-visible player (such as a popular streamer) engages in this behavior, in which case they may issue an ID ban (Riot employees manually ban any account that such a player is seen to use).
Riot's punishment system used to hand out stacking chat restrictions, such that consistently toxic players basically had a permanent chat restriction. Unfortunately, it turns out that such players used their few chat opportunities to be toxic, and, when they couldn't be as toxic as they wanted to, they resorted to committing non-chat offenses such as griefing (following someone around and taking their farm, using wall abilities to interfere with their play, etc.) or inting. The purpose of the punishment system is to eliminate rule-breaking, not make it worse. Thus, if a couple chat restrictions don't make any difference in a player's misbehavior, the system ramps up the punishments until the player is permabanned and thus unable to use that account to break any more rules ever again.
Riot used to give toxic players a long series of gradually-increasing suspensions. However, they found that players who got more than a few punishments would never stop misbehaving and receiving punishments. As the goal of the punishment system is to eliminate rule-breaking and Riot has absolutely no interest in coddling toxic players, the system was changed to eliminate this long tail of irredeemable players. Compared to the hundreds or even thousands of typical players who are bothered over dozens or hundreds of matches ruined by a toxic player, that one player's ability to annoy people merits no sympathy or concern. The preferred outcome of punishing a misbehaving player is reform: according to Riot's figures, most players who get one punishment never get another. However, when a player refuses to stop breaking the rules after a few warnings (punishments), they are removed from the game with a permaban because Riot no longer believes them capable of reform.
The money Riot gains from duplicate purchases on serial permabanned players' accounts pales in comparison to the many typical players driven away by toxic customers. It is not a conspiracy. Riot just doesn't want those toxic players to play the game anymore.
