Economists of XX century about influence of taxes on economical activity

In this essay the author attempts to investigate how economists of the 20 century viewed the influence of taxes on the economic activity of commercial entities. The author defines the concept "efficiency" as effective development of productive forces and optimal use of resources therein, whereas the concept "equity" is defined as reduction of un-balance in income distribution. This paper describes the evolution of different viewpoints on the problem of progressive taxation (from J. S. Mill and other 19 -century economists up to representatives of the Swedish school and welfare economics). The author reveals the difference in positions of Keynesians and Neo-classicists on the influence of taxes on aggregate demand and aggregate supply. Considerable influence is laid upon the debate among Keynesians and Neo-classicists on the influence of taxes extended to business activity. A.H. Hansen as a follower of J.M. Keynes was well aware of the negative influence of high taxation rates on economic activity. At the same time high taxation rates are automatic stabilizers as they change in accordance with economic development. In the phases of economic growth high taxation rates restrain enterprise activity and keep an economy from "overheating". In the phases of economic downturn high taxation rates stimulate enterprise activity. This article shows the role of A.H. Hansen in justification of "human resources" doctrine. The author of the article agrees with A.H. Hansen that the issue of taxation load is connected with that one of social values. It is an issue of structuring public expenditures, prioritizing expenditures, identifying the share of expenditures on the primary public goods meant for all society members including those with a high income. Further on the paper reviews the debates over the Keynesian model of income redistribution by means of taxation. Perspectives on the problem of progressive taxation are analyzed therein. The author considers views of the supply-side economics supporters such as M.S. Feldstein and A.B. Laffer who proved that an imperfect tax system had a negative influence on private savings and investment. In reference to these views, critical comments and assessment of the tax reform in the time of reaganom-ics are provided (J.E. Stiglitz, J.K. Galbraith, В.Р Bosworth, R.L. Carson and other authors). The author reveals a difference in views of Keynesians and Neo-classicists on the influence of taxes extended to aggregate demand and aggregate supply. According to the author the foundation of the controversy between Keynesians and Neo-classicists are dissimilar opinions on the nature of market economy and its functioning mechanism, savings to investment ratio, the role of the state as well as various interpretations of the tax system impact on incentives and motives for economic and labour activity ("substitution effect" or the "income effect"). Eventually, the author arrives at the conclusion that the viewpoints held by Keynesians and Neo-classicists are well substantiated and that representatives of the two schools have more common ground than discrepancies.

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