General Discussion

If only one or a few states impose the tax, they will simply move out of state. Worse, they might start moving their COMPANIES out of state. Say goodbye to the income tax that these highly paid engineers make. Thousands of them.

Second, lets say they agree to pay a 5 percent or 10 percent "wealth tax" on their net worth. Most of that net worth is in unrealized capital gain ( almost all of it ). To pay the state actual money, they would need to liquidate some of their stock holdings. Quite a bit actually. That much selling will depress the stock they own in their various companies... and, again, that drives down the actual tax base from restricted stock units ( RSUs ) that they pay their employees. Most of those employees do sell some or all of the quarterly stock grants as part of their compensation. Those RSUs are paid at the time the stock is transferred to the employee... at max tax rate ( whether they sell the remainder of the RSU or not ). Driving down the value of the stock by forcing the majority owner of that stock ( and what would be taken as a bell weather by the market ) will not only reduce the value of the RSU, it will also ( by the max tax amount possible ) reduce the state and federal share of the money generated through the RSU program.

For example, let's say an employee receives a 200 share a quarter stock RSU in a company currently selling shares at $100/share. That stock is worth $20K every quarter ( and if the stock remains at $100, $80K a year... a nice "bonus" ). At the time of the stock grant nearly 100 shares are sold immediately ( forced sale ) and the money is given to the Feds 36 percent, and California 11 percent ) and the employee gets the remainder 100 shares at the strike price of the stock on the day of the RSU. If the stock goes up in price from there, the employee will pay additional taxes either as regular income or capital gains on the value of the increase... but if the stock goes down ( AI bubble? ) then all they get is to offset other gains ( if any ) by declaring a loss on this transaction. Now, should a wealth tax force the majority share holder ( pick a billionaire ) to sell to raise, say $10 billion usd, and this sale causes the stock to decrease in value by 1o percent, then the employee that paid nearly 50 percent for the RSU is now holding stock work only $90 / share... and causing that employee to sell the RSU immediately rather than take a loss. That drives the stock price down even more... thus creating an ugly sell cycle ( bursting the bubble perhaps... but by use of a tax, not from market events like the failure of AI companies to generate enough earnings to justify their market cap. This is added risk to the company. Elon started moving employees out of California to no state income tax Texas just for this reason.

You want to tax billionaires, impose more luxury taxes... tax what they spend... and try to get all states to do that same. Or figure our some other way to get their money.

One thing I can tell you, don't bother to raise income tax or create new high income tax brackets for them... because, in general, they can do without any income. Anyone worth over say $50M usd does not need an income... they can simply go to a bank and borrow the money they want to spend... and no pay more than a few dollars of income tax. All completely legal and easy to do.