The reason that markets work is that people can expect to profit from them. There is no separating "people have different wealths" from functioning markets.
Money is invested because people with money chase yield, if yields are positive, but lower across the board, that money would still be making the exact same investments.
But it's certainly not the case that people make the "exact same" investments with or without taxes, especially of course as taxes get higher. Money will shift out of investment to consumption as expected profits decrease, or indeed out of the tax regime to other areas or to black markets.
the goal is to have investments that serve broad interests. instead of investing in better yachts, supercars, jets, etc.
instead of investing into Amazon to dropship fake shit for quick bucks our economic surplus ought to go into developing better actually useful appliances, tools, technologies
for example, instead of OralB and Philips bamboozling us with sonic this and that with smart AI toothbrush marketing we ought to actually figure out dental care.
okay, sure, higher taxes on the wealthy doesn't guarantee more conscious consumerism, but might at least give it a chance.
Except on the middle class. All capital gains do to middle class workers is ensure they stay middle class
That is required for capital markets to work.
How about $5 spread over 1 million people? How about $5 million?
The reason that markets work is because participants have "skin in the game", and losing money would hurt them, so they want to avoid losing money, so they try to make good decisions, and those that don't lose their money and are disempowered in the process. But once you reach a state where you're so wealthy that money no longer matters, you are able to distort the market at will, making it irrational (and thus inefficient) and destroying its ability to efficiently allocate scarce resources.
I wish more people understood this. You don't need to go full communism and make everyone's wealth equal, but if you want markets to work you do still need to make sure that the wealthiest are not so wealthy that they won't suffer from making poor financial decisions.
Please provide a case history.