Oh boy. You might want to take a look at the full quote instead of cherry-picking:
The friction or antagonism between the private and the public sphere was intensified from the first by the fact that, ever since the princes' feudal incomes ceased to be of major importance, the state has been living on a revenue which has been produced in the private sphere for private purposes and had to be deflected from these purposes by political force. On the one hand, taxation is an essential attribute of commercial society -- or, if we accept the conception of the state alluded to in the first chapter, of the state -- and on the other hand, it is almost inevitably in the nature of an injury to the productive process. Until 1914 roughly -- if we agree to consider modern times only -- that injury was confiend within narrow bounds. But since then taxes have grown, by degrees, into the dominant item of business and family budges and into a major factor in the explanation of unsatisfactory economic performance. Moreover, in order to wrench every-increasing amounts from an unwilling organism, a huge administrative apparatus has come into existence that does nothing but struggle with the bourgeoisie for every dollar of its revenue. That organism has in response developed organs of defense and does an immense amount of work in self-protection. Nothing else brings out so well the wastes that result from the conflict of structural principles in a social body. Modern capitalism relies on the profit principle for its daily bread yet refused to allow it to prevail. No such conflict, consequently no such wastes, would exist in socialist-society. Since it would control all sources of revenue, taxes could vanish with the state, or if my conception of the state does not command approval, with the bourgeois state. For, as a matter of common sense, it would be clearly absurd for the central board to pay out incomes first and, after having done so, to run after the recipients in order to recover part of them.
In case you clearly have misunderstood his point, which it is quite evident that you have, there exists a net loss, a waste, an absurdity, that exists in modern capitalism.
Privately, we amass profit, but we are in a society, and we must have a governing body, and that governing body must get it's money from somewhere to operate. We've smashed two systems together in an attempt to ignore reality.
We have a huge part of the government solely dedicated to keeping the government revenue alive. We understand that we must give out welfare to have a functioning society, yet we turn around and tax people on unemployment and welfare, something Schumpeter says would defy common sense yet makes sense to right-wing retards.
Furthermore, his view points are what we could consider that to fall under the idea of Basic Income.
Schumpeter agrees with Marx -- he only disagrees with how he think it will come about -- he advocates for a stronger central government.
That quote is used to illustrate the absurdity for trying to live under two systems, and he believes that a realization of this absurdity will be but one step towards full on socialism.