If you're taxing wealth (and not income) then switching stocks into cash doesn't change the wealth. Then use the cash to pay the taxes which reduces the wealth.
I believe the argument was that for some people, switching stocks into cash actually do change the wealth, because they own such a large % they are meaningfully moving the market by selling (the "paper money" argument).
And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
