Not all taxation is bad by this argument. Only demanding liquidity for taxes on illiquid transfers is. If the government took 30% of the shares of the company

Not all taxation is bad by this argument. Only demanding liquidity for taxes on illiquid transfers is. If the government took 30% of the shares of the company in lieu of the same amount in cash, the issue would be completely resolved. There would be no reason not to invest in the business - the government takes 30% (or whatever the rate is) of shares regardless. The problem is that turning illiquid assets into cash costs extra money.