Well said. To go a bit further, limits on income are likely to encourage people not to try truly hard or truly risky ventures. Paul Graham addresses this at http://paulgraham.com/gap.html
If you look at international entrepreneur rates, its pretty clear that there is no relationship between income tax rates and start-up activity (that's not to say that specific tax policies don't make a difference). http://www.internationalentrepreneurship.com/total-entrepren...
For every argument about high tax discouraging risky ventures, there is a counter-argument that high safety nets reduce the risk of start ups.
"limits on income are likely to encourage people not to try truly hard or truly risky ventures."
When people say things like this it reminds me of religious fundamentalists who claim that a world without belief in God would be some sort of anarchist murder-on-the-streets hellscape because people wouldn't have a reason to act morally or ethically anymore.
Not only is it incredibly pessimistic to believe either of these things, but you don't have to look far to see tons and tons of real-world examples that prove that the statement is completely ridiculous.
There's an important difference between wealth and income that PG does not go into.
Sure, I'll buy the idea that taxing income discourages work (though its impact is far more muted than some people would like to suggest).
However, I've not yet seen any argument that taxing wealth itself discourages work or wealth creation. If anything, taxing wealth keeps people from sitting on their assets and doing mere "wealth preservation".
If I were a Ramen-profitable startup entrepreneur, I'd much rather be taxed at 2% of my net wealth than at 30% (or even 15%) of my capital gains. Indeed, if I were anyone who planned on leveraging my capital to actively create wealth (c.f. Elon Musk) I should much prefer wealth taxes over capital gains taxes.
If we live in a meritocracy then anyone with a lot of wealth should be able to relatively easily average >6% ROI year-over-year.
