Richard Kerschagl, Steuerstaat und sozialisierter Staat (1952)

Richard Kerschagl’s five-section article examines a paradox of modern public finance: expanding state ownership has not displaced taxation but has developed alongside an increasingly burdensome fiscal apparatus. His central distinction is between what socialization should theoretically permit—financing the state through public production and administered prices—and what it has actually produced: continued taxation, administrative duplication, and uncertain enterprise profitability. The argument moves from fiscal history through general propositions about taxation to the economics of socialization, concluding with criteria for reform.

Section I traces the joint origins of taxation and state enterprise to mercantilism. Regular revenue supported the new judicial, military, and administrative apparatus, while governments also founded productive enterprises. State production therefore precedes Marxism. Physiocracy’s lasting contribution, Kerschagl argues, was less the single-tax proposal than the principle of universal tax liability. The disappearance of privileged estates’ exemptions followed the state’s assumption of functions formerly performed by nobility and church: exemption lost its reciprocal justification.

Kerschagl characterizes the nineteenth century by income taxation and the twentieth by turnover taxation. His concern is the convergence of apparently opposed systems: analytical and synthetic income taxes, proportional and progressive schedules, and single-stage and multistage turnover taxes increasingly borrow one another’s techniques. Formal classifications consequently matter less than effective burdens. Very high marginal income-tax rates, he maintains, diminish both honesty and willingness to produce. Turnover taxation, differentiated by product, might provide room to reduce especially discouraging income-tax rates, although it too can become excessive.

Section II develops four propositions: diminishing tax yield, the potential differentiation of different taxes, their broadly comparable possibilities of shifting, and distinct zones of tax burden. Revenue can decline through reduced effort as well as false declarations; Kerschagl does not claim that theory can specify exactly when discouragement becomes decisive.

Wir können diesen Satz vielleicht am besten so formulieren, daß auch in der Steuerpolitik, insbesondere bei den direkten Steuern, sehr oft wenig mehr ist.

English translation: We can perhaps best formulate this proposition by saying that in tax policy too, particularly with direct taxes, less is very often more.

The qualification matters: this is an incentive argument, not a demonstrated universal revenue formula. Likewise, his claim that turnover taxes can be differentiated challenges any automatic identification of income taxation with fairness. Tax shifting becomes a problem of adjusting costs through prices, payments, economies, or avoidance. His “zones” distinguish burdens low enough to make distribution relatively unimportant, burdens requiring careful allocation, and overload so severe that redistribution cannot substantially remedy it. In the last zone, the total claim on output must fall.

Section III supplies the article’s central conceptual reversal. If the state owns production, sets prices, and pays most incomes, separate taxation appears redundant: it could obtain equivalent resources through enterprise receipts, prices, and remuneration. Yet Kerschagl describes the opposite development.

Wir erhalten das schier groteske Bild eines steigenden Steuervolumens neben fortschreitender Sozialisierung, und zwar steigend sowohl bei den Produktions- wie bei den Konsumsteuern.

English translation: We obtain the almost grotesque picture of a rising volume of taxation alongside advancing socialization, rising in both production taxes and consumption taxes.

His explanation combines administrative inertia with difficulties of economic calculation. Finance ministers retain familiar collection machinery rather than risk replacing it with public pricing. More fundamentally, administered prices and transfers can manufacture apparent profitability without establishing efficient resource use. Altered capital formation, monetary intervention, and the weakening of market prices obscure genuine returns. Public enterprises may also pursue objectives other than revenue. Planned economies retain multiple instruments—taxes, subsidies, price decrees, monetary absorption, and credit creation—because their complexity permits flexible changes of emphasis. Socialization thus supplements rather than supersedes the tax state.

Section IV interprets this coexistence as an overload crisis. Kerschagl’s narrower claim is important: socialization need not itself be a financial failure; it need only fail to provide enough revenue to reduce taxation. Against assumptions of unlimited state financial power, he insists that politically determined purposes have no natural stopping point, whereas their productive foundation remains limited.

Der einzig mögliche Ausgangspunkt für eine gesunde Staatswirtschaft sind nicht wechselnde neue Schlüssel für die Verteilung des Sozialproduktes, sondern Sicherung und Steigerung des Sozialproduktes selbst!

English translation: The only possible starting point for sound public economic management is not continually changing formulas for distributing the social product, but securing and increasing the social product itself!

He accordingly judges public and private organization by achievable output with minimum coercion and maximum security, and by whether distribution preserves productive assets and future income. Section V translates this criterion into reforms: reward additional effort, test genuine public-enterprise returns, and eliminate contradictory circuits of taxation and subsidy. Welfare provision should retain reciprocity between contribution and benefit, although he accepts redistribution when state intervention enlarges the output supporting it.

The conclusion makes reliable accounting indispensable to any replacement of taxation by enterprise income; Kerschagl states that no adequate alternative to market-based verification is yet known. The article’s relevance lies in connecting fiscal incentives to the institutional problem of distinguishing real public returns from accounting transfers.

Die „Selbstbesteuerung“ des Staates und der weitere Ausbau der Bruttoeinkommensfiktion entsprechen jedenfalls durchaus nicht den Gesetzen ökonomischer wie verwaltungsmäßiger Zweckmäßigkeit.

English translation: The state’s “self-taxation” and the further expansion of the gross-income fiction certainly do not accord with the principles of economic or administrative expediency.