No. of Recommendations: 10
Until you take away the capital they've generated. Then there's no new business that gets formed.
But the same is true of every one else that's being taxed.
I work in a law firm. The way law firms are structured, everyone's income is always taxable - even the founders and owners. There's no appreciation of "shares" in the firm analogous to corporate shares, to allow their earnings to escape realization. That means there's less capital available for them to invest in new businesses (or expanding the old one). Plenty of people would have more capital for investing in businesses if they were spared from taxation - but because they earn their income through forms other than share appreciation, they have to pay their taxes.
For nearly everyone (in nearly every economy, not just ours), some of your earnings go to the taxman to pay for government. By definition, that means that some proportion of those earnings is not available for consumption or investment or savings - it goes to pay for government. There's no economic reason to exclude the money people earn through share appreciation rather than wages or other realized income. There are a lot of practical reasons, but not a good economic reason.
