Here is a video in response to a question by Arne at the Angry Bear blog. He stated that if taxes were raised on capital and then that money was given to labor, that the effective demand limit would be raised.
This video says that he is correct and that the effective demand limit would rise. However, on second thought, the rise in capital taxes would lower the profit threshold of firms and lower the propensity to invest (MPI). So there could be offsetting consequences to nullifiy the effect on the effective demand limit.
I did another video to follow-up this one showing that as you raise taxes on capital, there will be offsetting changes in capital's propensity to consume and invest. These changes could offset the rise in taxes on capita, thereby bringing the equilibrium level of real GDP back to the effective demand limit.
This raises the question if the historic constancy of the effective demand limit is some sort of attractor state for the economy.
Link to original video explaining the dynamic circular flow model.