Wealth Taxes Threaten Illiquid Family Firms

Wealth taxes that levy liabilities based on paper valuations of private companies can force owners of family‑held, illiquid firms to sell assets, relocate, take on debt, or break governance norms to raise cash. That mismatch — taxing inferred market value when no market exists — creates perverse incentives that may hollow out locally rooted businesses and prompt jurisdictional flight. — If true, many state or national wealth‑tax designs could unintentionally shrink productive local businesses, shift tax bases, and reshape corporate ownership and relocation patterns.