Once a 'one-time' wealth tax is implemented to cover deficits, it removes pressure on politicians to manage finances responsibly. The tax becomes a recurring tool, and the definition of 'wealthy' inevitably expands as the original tax base leaves the jurisdiction.

The US innovation ecosystem is fueled by a culture of risk-taking, which is incentivized by a regressive tax system at the highest levels. The tax rate plummets for the wealthiest 1%, creating an enormous potential upside that encourages venture creation, despite the lack of a social safety net.

Wealth is accumulated from after-tax income. Taxing it again punishes saving and prevents the concentration of capital essential for funding high-risk, innovative projects that drive society forward. Most countries that try it abandon it.

Societal prosperity relies on harnessing the competitive drive of the hyper-ambitious few who sacrifice everything to build extraordinary things. Disincentivizing this small group with heavy taxes or regulations stifles the innovation that pulls the broader population, including the middle class, forward.

Rather than increasing revenue, wealth taxes incentivize the wealthy to leave, shrinking the tax base. As seen in New York, this forces the government to eventually broaden the tax to lower income brackets to cover the deepening deficit.

When states or nations impose wealth taxes, the wealthy often relocate, as seen when New York's governor told them to leave. This erodes the tax base. Since government spending rarely decreases, officials are forced to broaden the tax to lower income brackets, ultimately increasing the burden on the middle class.

The historical record shows that wealth taxes cause capital flight on such a large scale that they ultimately reduce a government's total tax revenue. For example, after France introduced one, 42,000 millionaires left with €200 billion, forcing the government to later abolish the tax.

Instead of taxing unrealized gains, which forces asset sales and creates economic distortions, a more sensible approach is to tax the cash that wealthy individuals borrow against their assets. This targets actual liquidity and avoids punishing the long-term investment that builds the economy.

According to Mark Cuban, a wealth tax would trigger massive capital flight. He and other investors would require startups to relocate out of states like California as a condition of investment. This preemptive move would starve the state of its next generation of high-growth companies, destroying future tax revenue.