If it became impossible to convert it into income without paying 98% tax for sure its price would fall eventually.

However, it probably wouldnt be the most effective way of extracting that wealth. A lot of families would try to restructure their holdings to convert income into unrealized capital gains and try to wait a few decades until the tax could be brought down again.

The wealth is the ability to live in a desirable place, that is structured so not many others can live there. You could mess with the accounting or the liquidity, but it is still wealth that few people have and most people don't. In fact most such real estate multimillionaires are not interested in cashing out. Only in continuing to live there, and making sure that not too many other people start to live there. Liquidity is worth something so it would reduce the price somewhat, but I don't think it's central.

By definition you can be “unconscionably wealthy” and be middle class.