Keynes on Kalecki's Theory of Taxation: Contents Approved, Method Questioned

Abstract

This paper considers Keynes's comments on two essays by Kalecki addressing the effects of three different taxes on national income and employment. Keynes appreciated the highly compressed, clearly shaped, and convincing character of Kalecki's analysis, but sharply criticized his method, pointing out that Kalecki's theoretical conclusions were based on the tacit assumption that the decisions of consumption and investment are “independent from” the levy. Keynes's criticism is fully coherent with the method of analysis he adopted in the General Theory and with his critique of the “classical” theory of employment.