I will give you a real world scenario. Imagine a hotel property. It costs 25 million in upfront capital and loans to build and open. When this hotel generates a profit of say 1 million dollars that profit is taxed at the corporate rate of 35%. Then an investor recieve their share of the after tax profits of say $650,000. You example has the government now taking 35% of that 650K leaving the investors with $422,000 to split up.
In this scenario the government has taken approximately 60% of the total profits and kindly left the investors to scrap over approximately 40%. Here is the problem. If we look back at that investment and simply took the 25 Million and invested it in insured tax free munis at say 4% interest the investor would net $800,000 with no risk. That hotel would never be built, its employees would not be employed and the government would lose out on the 35% + 15% of the profit they currently take.