So if a startup grows from a $1M valuation to $100M valuation they should be taxed on the $99M? That sounds like a great way to kill entrepreneurship and venture capital.
The point is that when investors are faced with the choice between investing in a incumbent (ie. "safe" company with limited growth potential) and challenger (high risk companies with high growth potential), such a tax would heavily favor incumbents because incumbents wouldn't be subject to the tax but the challenger would.
So if a startup grows from a $1M valuation to $100M valuation they should be taxed on the $99M? That sounds like a great way to kill entrepreneurship and venture capital.