> capital will be allocated to riskier projects when the government takes 70% of annual return on capital but allows capital owners to write off years of losses against it than when the corresponding tax figure is 15% or 20%.
I'm not convinced that's actually true at the level of large investors; as long as write-offs are allowed, the break even point is the same (and a lot of big investors are corporate and corporate capital gains are taxed as normal corporate income, so are unaffected by personal capital gains shifting from preferential rates to normal personal income rates.) The big difference for write-offs comes from smaller, less diversified individual investors if you allow full write-off against regular income rather than limiting to $3000 a year.
The breakeven point looks the same until you factor in inflation (assuming no relief for that) as a benchmark and realise that at 70% tax you need ~9% annualised gross returns instead of ~3% to beat it (but with writeoffs for bad years, that's still achievable). Even with the superrich already being risk tolerant and willing and able to pursue high yields, that's going to see some rebalancing of portfolios
Obviously this doesn't apply to regular public companies and financial institutions not paying 70% tax rates, but we could expect to see corporate vehicles entirely controlled by people paying 70% tax on dividends and capital gains from them behaving a little differently too.
I'm not convinced that's actually true at the level of large investors; as long as write-offs are allowed, the break even point is the same (and a lot of big investors are corporate and corporate capital gains are taxed as normal corporate income, so are unaffected by personal capital gains shifting from preferential rates to normal personal income rates.) The big difference for write-offs comes from smaller, less diversified individual investors if you allow full write-off against regular income rather than limiting to $3000 a year.