While I wouldn't underestimate the degree to which some people will go to avoid taxes on principle I do agree that it seems a bit farfetched to intentionally fail your business to avoid paying some tax.
I can definitely see a situation where the owner prefers to have some storefronts vacant rather than lowering the rents because they aren't sure lowering the rents would actually fill the storefronts and it might cause the other tenants to demand lower rents. Plus it might attract the wrong sort of business.
People really do limit themselves because they don't understand taxes. There's a lot of bad information about tax out there, and even some propaganda.
I've met people who sincerely believed making enough to enter another tax bracket would mean all their income would be taxed at that rate, not just income inside the range.
I can definitely see a situation where the owner prefers to have some storefronts vacant rather than lowering the rents because they aren't sure lowering the rents would actually fill the storefronts and it might cause the other tenants to demand lower rents. Plus it might attract the wrong sort of business.