It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.)
Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)
That's assuming you stop earning, but of course most people will not stop earning. Also, the typical way this works is that the wealth tax gets added to your income, so if you end up not paying income tax by definition you don't pay wealth tax.
Example: Say I'm worth 1M credits today and my wealth tax is 10K (1%), that means my income gets another 10K added to it. Real income is 50K, + 10K so I pay tax as if I earned 60K. 40% of that works out to 24K worth of taxes.
In a bad year I'd earn maybe 10K, add that 10K (I'm still worth that 1M), and that year would pay 40% of 20K, which works out to about 8K.
Progressive tax scales can further improve the situation in years with low income.
The markets don't have much to do with this, it's a fictive income, not what you actually made.
Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)