That creates a really significant free-rider problem. In your hypothetical, companies have a strong incentive to start in countries that have strong infrastructure and services (safety nets to reduce risk for founders and early employees, higher-education to ensure a supply of educated workers, etc), then move to a low-tax jurisdiction once they are successful.<p>Imagine if investors in startups couldn&#x27;t take equity, but were limited to taking a percentage of current profits. That would create a huge disincentive to be an early-stage investor, and a huge incentive to be an investor that could come in with the cheapest rates at the last round of investment for a company that already had established growth and revenues.<p>In the alternate, consider the hypothetical of tax rate auctions at the time of birth. I.e.  what tax rate would people bid in order to be born and try to become successful in the U.S. instead of somewhere else?