I've heard this argument, but as long as there is some return then people will invest because some is better than none. VC investments have the potential to return insane amounts, so people will still buy those lottery tickets even if the profits are taxed. I know this because actual lottery winnings are taxed and people still buy those tickets in huge numbers. And if you are saying that taxing investments the same as worked income is 'super harshly' and 'ruinously' high, then what does that say about the state of wage taxes?