Riot tried that once before and many people with that punishment just resorted to gameplay trolling instead. Riot Tantram even posted about this a few months ago:
It really breaks down into two categories.
1.) Helping players reform
2.) Shielding others from the behavior, at a cost.
We used to issue chat restrictions that essentially scaled indefinitely.
We were able to determine that after a certain point the penalty no longer helped with reform. The 10-game and 25-game counts for chat restrictions are based on data that they were both light enough, and felt strict enough to encourage people to understand their behavior is unacceptable in game and change it.
We also saw that the players in this 'large restriction' category defaulted to gameplay altering means of harassing their team. It caused an increase in feeding and trolling.
The sample size of this population and time frame is huge. Essentially the time spanning from the introduction of chat restrictions to the introduction of IFS.
So my question for you is, would you rather have more feeders and less negative chat?
Also spending money =/= immunity to the rules. To quote Kei143:
When Riot permabans someone, their philosophy is "the chances of this guy reforming isn't a whole lot, we'd rather not have him in the game". Thus in their eyes, they have already written off the toxic player as a paying client.
From a business standpoint, do they want to remove the toxic guy who has spent $500 but is causing a negative environment for 4-9 other players in every game? Those non-toxics are also spending $500 and probably will spend more, promote the game more when they are enjoying the game AND they won't cause a negative environment.
I personally think it is a fine argument to protect the ones that are paying money and aren't toxic rather than protecting the ones that may pay the same amount but are toxic.