Taxation and Kalecki’s Distribution Factors

Abstract

Kaleckian economic theory has explicitly ignored the tax structure's impact on the distribution factors. This article analyzes the tax structure's impact on the posttax distribution of income at the industry and macro levels, and attempts to make a contribution to the debate regarding the composition of taxation. In order to accomplish these obiectives, Kalecki's views on the incidence and impact of taxation are briefly reviewed; Kalecki's theory of income distribution is presented; the various types of taxes are classified as prime (direct) or overhead costs; the tax system's impact on the posttax distribution of income at the industry level is examined; and the tax system's impact on the macro levels of posttax income distribution, profits, and national income is analyzed. With the goal of maximizing national income, a tax policy is recommended. An appendix is included in order to demonstrate the economic consequences of tax policy that assumes business taxes are included in the definition of prime costs.