Both the Greens and the coalition criticised the tax changes on Friday as the government looks to the minor, left-wing party to help it ease the reforms through the Senate.
Despite the government announcing carve-outs for startups from the new capital gains regime, Opposition Leader Angus Taylor said the changes would still be toxic for Australia's prosperity and productivity.
But Greens senator Nick McKim said the changes didn't go far enough, arguing "absurdly generous" grandfathering provisions would hand $33 billion a year in tax breaks to existing investors.
Treasurer Jim Chalmers said Labor had been engaging with Senator McKim's party in the hope of getting the legislation passed.
"I've learned not to pre-empt outcomes in the Senate until the final votes are counted," he told reporters.
The reforms were worthwhile, but Labor had "lost some political paint" as a result of the campaign against them, Dr Chalmers added.
In a speech to business leaders on the NSW Central Coast, the treasurer tried to play down the impact of the overhaul, pointing to treasury analysis showing 60 per cent of all net capital gains were earned by just 0.2 per cent of taxpayers.
While sold as making the housing market fairer for first home buyers at the expense of property investors, the changes were extended to all assets, including shares and businesses.
The proposal to replace the 50 per cent discount with an inflation indexation model and a minimum 30 per cent tax rate sparked a backlash from entrepreneurs and venture capital investors.
Because startups often have a negligible initial cost base to index from, the proposed changes would double the maximum effective tax rate on capital gains to nearly 47 per cent, diminishing the incentive to take a risk and start a business.
"Innovative businesses" will continue to have access to the existing 50 per cent capital gains tax discount as part of a new concession unveiled on Thursday, while eligibility for the existing 50 per cent active asset reduction for small businesses will be expanded.
The Tech Council, which represents Australia's technology industry, including many startups, said the carve-outs were a "constructive response" to the sector's concerns.
But one founder, who asked not to be named in order to speak freely, said the startup community felt the government was making it harder to attract top talent.
The flow of young talent in their 20s or 30s moving to the US would only accelerate after the changes, he told AAP.
"Every frontier lab is now chock-full of Australians working in the US," he said.
"You get paid way more, you get taxed less. You get a bit of an adventure."
Consultation on how the carve-out will operate is ongoing.
A snap two-day parliamentary inquiry into the tax changes is due to hand down its final report later on Friday.
A 30 per cent minimum tax on discretionary testamentary trusts, which has been likened to a death tax, was also scrapped.
Opposition housing spokesman Andrew Bragg has been a chief cheerleader against the changes and doubled down on calls for Dr Chalmers' head.
"Jim Chalmers had Treasury officials work on his terrible new taxes for up to six months behind the scenes," he wrote on X.
"He threw their work in the bin after one month. And it's still bad. He should consider his position."
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