A good social support system is not detrimental at all to a rich startup culture. It is financed by taxes, and as startup you only need to pay taxes on profit, so you don't bear any additional costs.
If you are in a high-tax state, your employees will pay a lot in taxes, and the cost is passed on to you, their employer. You will need to pay them enough to pay 40% in taxes and have some money left for living expenses.
Which may make your startup (or any business, really) uncompetitive, or even infeasible compared to low-tax countries/states.
There needs to be a cautious balance between providing social support (which I am all for) and overtaxing. For me, the most important part is the amount of tax money that actually goes to benefit the people who need it, rather than the bureaucracy.
In the US, the value we get for our taxes is VERY low.
Well, you could have a "unicorn or bust" strategy, chasing primarily high margin b2b and b2c products so big salaries aren't a dealbreaker.
Of course, I just described the current SV startup scene, including why things like Juicero get funded while affordable real estate development is a comparatively unattractive investment.
The flip side is of course:
If you are in a low-tax state, your employees (or you) will pay a lot for things like health care and retirement, and the cost is passed on to you, their employer. You will need to pay them enough to pay those costs and have some money left for living expenses.