You're probably right, but what about Joe Everybody Handyman who decides that the possible payout isn't worth the risk of starting a business. Sure he could d

You're probably right, but what about Joe Everybody Handyman who decides that the possible payout isn't worth the risk of starting a business. Sure he could do it, if he really wanted to try, but the prospect of starting a business is already a pretty daunting one without removing more of the incentive. Why take on the added risk to get paid about the same salary as you could when you're just an employee? For some people, though, the financials aren't even considered. Some people just want their freedom and they want to create, and taxes aren't going to dissuade them. Others, like VCs, do get into this game with the express goal of making a pile of money. If the payout is less, the risk they're going to be willing to take on is less, and that means less development. With companies that bootstrap, this may not be as big a concern, but many companies simply wouldn't exist without the VCs willing to take on the risk. It's not an ego thing for them, it's all about the Benjamins.