Earlier quoted context omitted.
It's easy to dream up scenarios that prove your point. How about this one: Company has a bad year. Dividends are cut to zero. Founder reduces salary to bare minimum required for her expenses. On paper, she still has $50 million net worth of illiquid non-public stock. Government demands $200,000 wealth tax. How does that play out?
If you can't sell it, it isn't worth $50 million.
But try telling that to the California state government when they come to collect their 0.4% wealth tax.