is that they are consistently earning the same high income.
The W2 class gets paid somewhat consistently. For many, their paycheck slowly grows over time but not dramatically.
There's a weird misconception that millionaires consistently rake in the same LARGE amount of money each year. They do not. In fact, persistent millionaires are the minority and there is a ton of turnover in this class. Good years in the stock market and capital gains in general play a huge role.
So when your system of taxation is heavily dependent on taking large chunks for amounts made over $136k, you're going to experience shocks and yo-yo's.
Here's the tax brackets for Cali, married joint (cut in half for single)
$0-$20,824 1% of your income
$20,824-$49,368 $208.24 + 2% of the excess over $20,824
$49,368-$77,918 $779.12 + 4% of the excess over $49,368
$77,918-$108,162 $1,912.12 + 6% of the excess over $77,918
$108,162-$136,700 $3,735.76 + 8% of the excess over $108,162
$136,700-$698,274 $6,018.80 + 9.3% of the excess over $136,700
$698,274-$837,922 $58,245.18 + 10.3% of the excess over $698,274
$837,922-$1,396,542 $72,628.92 + 11.3% of the excess over $837,922
$1,396,542+ $135,752.98 + 12.3% of the excess over $1,396,542
With an effective rate of 10+% on amounts earned over $698k, your state will experience sharp swings in collections because good years will be REALLY good. If you fund ongoing programs with those dollars, you're asking for trouble.
I'd note it's not a picnic for a middle class family with an AGI of $150k, who pays an effective rate of 5% or 7,255 in state income taxes, a small fortune considering what you already paid Uncle Sam. I have a cousin who both he and his wife do quite well for themselves, both earning north of 200k. Between cost of living, housing, and taxation, they certainly don't feel as wealthy as they are.