Full text: Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

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.

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