If you want to decrease economic inequality, you have to take from the rich, and give to the poor.
Becoming rich often involves taking risks (eg. starting a startup). If you penalize the rich, people are less motivated to take the risks you need to take to become rich.
Investors wouldn’t invest in startups as much if they knew they’d weren’t allowed to get rich from them. And you can’t trust the government bureaucrats to take risks, so it seems that no one really would be investing in startups.
And founders wouldn’t start startups if they couldn’t hope to get rich from them. (Another thing: early employees wouldn’t join them.)
So without investors and founders, it seems that startups wouldn’t get started if the government decided to take from the rich.
This argument applies proportionately. It's not just that if you eliminate economic inequality, you get no startups. To the extent you reduce economic inequality, you decrease the number of startups.
Killing off startups would be bad for everyone, because startups create a lot of jobs for people.
“So what? There’ll still be enough jobs. We’d just have to settle for slower growth.” The problem is that other countries will grow faster than us. And then any progress we’d make will have already been done by others. So eventually we’ll just be able to provide raw materials and cheap labor, and we’ll be taken advantage of.
People aren’t usually going after rich people who got rich through startups, they’re after those who get rich through power and corruption. So why not go after corruption? Because it’s hard to do so without going after startups.
What we really need to do is to break the connection between wealth and power. How? Demand transparency. Log everything. People are afraid to leave a trail.