4
of taxes on capitalist income. In consequence it seems
highly likely that increased interest payments on the public
debt can only be paid out of taxes on mass incomes. Thus
the basis of Kalecki's argument with respect to the public
debt is shifted even more from the ground on which it
originally rested.
Moreover, the weight which is thereby placed on taxation of
mass incomes makes the budget a carrier or even a stimulus
to inflation. This is obvious in the case of indirect taxes,
but it is true also for taxes on wages, because the wage
target in collective bargaining has increasingly been based
on take home pay.
Why did the rebates necessary to keep up private investment
become ever greater and why did the level of profits before
tax decrease ?
The problem, evidently, is relevant not only for the finance
of the interest on public debt, but more generally for the
scope of redistributive taxation: It seems that the welfare
state from a certain point onwards was financed mainly by
taxing the masses and not by any redistributive taxation.
See for this the work by J.L. Nicholson who showed that after
the early 1950'ies the redistributive effect of taxation in
Britain did not exist any more.