2
In fact, this difficulty (which also occurs - albeit
immediately and not only in future - when you follow
Kalecki's alternative policy of financing public spending
by taxes on corporation profits, increasing thereby
effective demand and employment) throws up a fundamental
dilemma of Keynesian economic policy: For social (or
egalitarian) reasons we want to tax business, for reasons
of incentive to invest we want to relieve it from burden of
taxation, sometimes even to subsidise it. Kalecki's modified
income tax seemed to show a navigable way between Scylla
and Carybdis; There is one level of income tax for capitalists
who don't invest, and another, lower level for those who
do invest their income. The difference between the two levels
would seem to be relevant for the incentive to invest, while
the absolute level (the higher one) would be relevant for the
burden you want to put on the capitalists. In other words,
if the incentive deemed necessary for investment demands
a certain rebate on the higher level of tax you may within
limits, raise the higher level to such an extent as to give
you a desired yield on the total taxation of capitalist
income. In other words you compensate for the loss in the
rebate by taxing the "rentier" (the non-investor) the more
heavily. The limits are of course that you can hardly tax
more than 100% of income. Therefore, the level of the income
before tax will be important; that, in fact, largely depends
on the state of demand.