https://mises.org/power-market/why-not-eliminate-taxes-all-income
Saturday, December 6, 2025
Libertarianism and Value Judgments
https://mises.org/power-market/libertarianism-and-value-judgments
The nonaggression principle
The guiding principle undergirding the libertarian philosophy is what is known as the nonaggression principle. As explained by the great libertarian economist and theorist Murray Rothbard (1926–1995):
The fundamental axiom of libertarian theory is that no one may threaten or commit violence (“aggress”) against another man’s person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a non-aggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory.
The creed of libertarianism is nonaggression: freedom from aggression and violence against person and property as long as one respects the person and property of others. Aggression is the nonconsensual initiation of violence, the threat of violence, coercion, theft, or fraud. The nonconsensual initiation of aggression against the person or property of others is always wrong — even when done by government actors. The use of force is justified only in self-defense or retaliation, must be proportional, but is neither essential nor required. And the use of force is only defensible against actual aggression, not because there is a theoretical possibility that someone might commit an aggressive act. Libertarians reject individual and especially government aggression against a nonaggressive individual’s person or property in order to prevent an action from occurring, effect a change in thinking or behavior, compel virtue or charity, achieve some desired end, or punish some peaceful action that is occurring or has already occurred.
Libertarianism
Libertarianism, therefore, as explained by Rothbard “is not and does not pretend to be a complete moral, or aesthetic theory; it is only a political theory, that is, the important subset of moral theory that deals with the proper role of violence in social life.” Libertarianism “is a theory which states that everyone should be free of violent invasion, should be free to do as he sees fit except invade the person or property of another.” Thus, in a libertarian society, that is, a free society,
People are free to pursue happiness in their own way, provided that they don’t threaten or initiate violence against the person or property of others.
People are free to live their lives any way they choose as long as their conduct is peaceful — even if their choices are deemed by others to be harmful, unhealthy, unsafe, immoral, sinful, financially ruinous, destructive, or irresponsible.
People are free to participate in any activity as long as their activities are non-violent, non-disorderly, non-disruptive, non-threatening, and non-coercive.
The voluntary, private, peaceful activity of consenting adults is none of the government’s business.
Freedom of voluntary association, discrimination, and conscience are absolute.
Individuals, not society or the government, are the ones who decide what behaviors they want to practice and what risks they are willing to take.
Because there are no such things as nebulous crimes against nature, society, or the state; because vices, immoral actions, dangerous activities, sin, self-harm, and financial irresponsibility should never be considered crimes; and because every crime needs a tangible and identifiable victim who has suffered measurable harm to his person or measurable damages to his property, the functions of government in a free society should be strictly limited to the protection of life, liberty, and property by prosecuting and exacting restitution only from those individuals who initiate violence against, commit fraud against, coerce, or violate the property rights of others. This means that the government should not transfer our wealth in the name of social justice, fairness, or equality; tax us to fund its boondoggles, military adventures, or programs that compete with the free market; force us to be charitable; compel us to be virtuous; or punish us for doing things that are not aggression, force, coercion, compulsion, threat, or violence.
So, regardless of what many liberals, socialists, progressives, Democrats, Republicans, conservatives, moderates, centrists, and populists may think about libertarianism, libertarianism is not about libertinism, utilitarianism, rebellion, indifference, greed, materialism, selfishness, revolution, anarchy, skepticism, atheism, nihilism, moral relativism, moral skepticism, egalitarianism, antinomianism, hedonism, or licentiousness. Libertarianism is not “every man for himself,” “anything goes,” “situation ethics,” “survival of the fittest,” “freedom from all constraints,” “dog eat dog,” “rugged individualism,” or “unfettered capitalism.”
But neither is libertarianism about one’s lifestyle, tastes, sexual proclivities, school of aesthetics, social attitudes, tolerances, values, morals, habits, diet, vices, or personal preferences. There is nothing about libertarianism that is inherently inimical to organized religion, the family, community, an ordered society, tradition, custom, shared values, cultural norms, objective standards of right and wrong, cooperation and collaboration between individuals, the natural law, social institutions, patriotism, the rule of law, or Judeo-Christian ethics. And it is an overly simplistic mischaracterization of libertarianism for libertarians or anyone else to say that libertarians are “economically conservative and socially liberal.” These are things that most nonlibertarians and even some libertarians don’t seem to get, hence the need for this article.
It is only by treating libertarianism as a moral instead of a political philosophy that libertarianism can be said to be an immoral philosophy. But even then, there is nothing inherently immoral about libertarianism, and, in fact, it is impossible for it to be so since libertarianism has no positive precepts or obligatory duties, and makes no assertions about God, religion, human nature, sin, or the afterlife. How could there be something immoral about abstaining from aggression, the nonconsensual initiation of violence, the threat of violence, coercion, theft, or fraud, and wanting others and the government to do likewise? In fact, it is violating the tenets of libertarianism that is immoral.
Why are not liberals, socialists, progressives, Democrats, Republicans, conservatives, moderates, centrists, and populists accused of being immoral when they advocate the government forcing some Americans to pay for the education, food, and health care of other Americans? Why do members of these groups not think it immoral for the government to lock people in cages for possessing too much of a plant the government doesn’t approve of? Libertarianism celebrates things such as individual liberty, private property, peaceful activity, voluntary interaction, laissez faire, personal freedom, financial privacy, individual responsibility, free enterprise, free markets, free speech, free thought, and a free society. There is nothing inherently immoral about any of these things.
Libertarian positions
Like liberalism, conservatism, and the rest, libertarianism is neutral on whether one buys organic produce, whether one wears a bicycle or motorcycle helmet, whether one recycles, whether one eats red meat, whether one supports local businesses, whether one wears a seatbelt, whether one takes vitamins, whether one is a vegetarian or vegan, or whether one avoids high fructose corn syrup.
But neither does libertarianism take a position on whether one believes in God, whether one attends church, whether one donates to charity, whether one is religious, whether one believes in life after death, whether one believes in a last judgment, whether one celebrates diversity, whether one votes, whether one salutes the flag, or whether one believes the Bible is the word of God. This lack of positive assertions bothers many who are not libertarians, and especially conservatives. The fact that libertarianism commits its followers to one simple proposition — it is wrong for anyone to initiate violence against anyone else, directly or via the government — is not enough for them.
What really bothers others, again, mainly conservatives, is that libertarianism has no position on things that are considered to be “bad.” Libertarianism takes no position on whether one plays the lottery, whether one gambles at a casino, whether one smokes tobacco or marijuana, whether one commits fornication or adultery, whether one uses profanity, whether one tells racial jokes, whether one reads a horoscope, whether one views pornography, whether one discriminates, or whether one is a homosexual. This doesn’t mean that libertarians don’t think that some of these practices are bad or even immoral. It just means that they believe it is not the proper function of government to interfere with the voluntary, private, peaceful activity of consenting adults, “bad” as it may be, as long as they don’t threaten or initiate violence against the person or property of others. Critics of libertarianism — and even some libertarians — have made libertarianism more complex or more expansive than it is.
This is no more evident than when it comes to the subject of value judgments. Most liberals and conservatives complain that libertarians don’t make value judgments while some libertarians complain when they do. In order to understand why this is so, we must first look at economic value theory.
Donald Trump Is No Grover Cleveland
https://mises.org/power-market/donald-trump-no-grover-cleveland
Beginning with George Washington, who took the oath of office for the first time in 1789, a total of 45 men have held the title of president of the United States of America. Less than half of them were elected to a second term: George Washington, Thomas Jefferson, James Madison, James Monroe, Andrew Jackson, Abraham Lincoln, Ulysses S. Grant, Grover Cleveland, William McKinley, Theodore Roosevelt, Woodrow Wilson, Calvin Coolidge, Franklin Delano Roosevelt, Harry S. Truman, Dwight D. Eisenhower, Lyndon B. Johnson, Richard Nixon, Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama. (It should be noted that T. Roosevelt, Coolidge, Truman, and Johnson were vice presidents who became president the first time after the death of the president they served under.) Franklin Roosevelt was elected to four terms, but he died three months into his fourth term. The Twenty-Second Amendment limits the president to two four-year terms. It was proposed in 1947 and approved by the requisite number of states in 1951.
Grover Cleveland — the first Democratic president after the Civil War — was both the 22nd and the 24th president. He was first elected to the presidency in 1884, winning both the popular and Electoral College vote. However, in the 1888 election against Benjamin Harrison, although he narrowly won the popular vote, lost the electoral vote 233–168. But in the next election of 1892, Cleveland defeated Harrison, winning both the popular and electoral college vote, and returned to the White House as the first of only two presidents elected to two nonconsecutive terms.
Donald Trump was both the forty-fifth and forty-seventh president. He was first elected to the presidency in 2016, when he lost the popular vote to Hillary Clinton but won the electoral vote 304–227. However, in the 2020 election against Joe Biden, he lost both votes. But in the next election of 2024, Trump defeated Biden’s vice president, Kamala Harris, decisively winning both the popular and electoral college vote, and became only the second president elected to two nonconsecutive terms.
Although Cleveland and Trump share the distinction of being the only American presidents elected to two nonconsecutive terms, Trump is no Grover Cleveland, who has been called “the last good Democrat” (Thomas J. DiLorenzo), “the last Jeffersonian (Ryan S. Walters), and “the last good president from a classical-liberal perspective” (John V. Denson).
Grover Cleveland
Stephen Grover Cleveland (1837–1908) was born in New Jersey during the presidency of Martin Van Buren, but moved to New York as a child. He was the fifth of nine children of a Presbyterian minister. He neither attended college nor served in the military. After being admitted to the New York bar and working as a lawyer, Cleveland entered public service in New York, first as assistant district attorney of Erie County, then as the sheriff of Erie County, then as the mayor of Buffalo, and finally as the governor of New York, which office he left after winning the presidency. He was the only man to serve as mayor of a major city, governor of a major state, and president of the United States, all in a four-year period.
Cleveland has been described by sympathetic historians as unyielding and principled, upright and trustworthy, compassionate and courageous, honest and virtuous, and having integrity and rugged strength of character, a powerful and attractive personality, and common sense and Christian faith. He was a highly intelligent, effective communicator who abhorred self-aggrandizement. This is all well and good, but what we are really interested in is Cleveland’s commitment to constitutional and libertarian principles.
Cleveland venerated the Constitution and was one of the most libertarian presidents America has ever had. He believed in a strict construction of the Constitution; a limited federal government; federalism; a free-market economy; sound money, the gold standard, and the separation of banking from the government; and low government spending and low taxes. Cleveland opposed war with Spain over the Cuban question, saying, “There will be no war with Spain over Cuba while I am President.” He later expressed opposition to the American annexation of Hawaii, saying, “I regarded, and still regard, the proposed annexation of these islands as not only opposed to our national policy, but as a perversion of our national mission. The mission of our nation is to build up and make a greater country out of what we have, instead of annexing islands.” Cleveland opposed the protective tariff, sought to improve the quality of life for American Indians, and believed that education of the black man would lead “to the proper solution of the race question in the South.”
In between his two stints as president, Cleveland spoke to the members of the Young Men’s Democratic Association of Philadelphia in 1891. His address was on “The Principles of True Democracy.” Echoing Thomas Jefferson, Cleveland described these principles as:
Equal and exact justice to all men, peace, commerce, and honest friendship with all nations — entangling alliance with none; the support of the State governments in all their rights; the preservation of the general government in its whole constitutional vigor; a jealous care of the right of election by the people; absolute acquiescence in the decisions of the majority; the supremacy of the civil over the military authority; economy in the public expenses; the honest payment of our debts and sacred preservation of the public faith; the encouragement of agriculture, and commerce as its handmaid, and freedom of religion, freedom of the press, and freedom of the person.
It is right that every man should enjoy the result of his labor to the fullest extent consistent with his membership in civilized community. It is right that our government should be but the instrument of the people’s will, and that its cost should be limited within the lines of strict economy. It is right that the influence of the government should be known in every humble home as the guardian of frugal comfort and content, and a defense against unjust exactions, and the unearned tribute persistently coveted by the selfish and designing. It is right that efficiency and honesty in public service should not be sacrificed to partisan greed; and it is right that the suffrage of our people should be pure and free.
He maintained that “economy in the public expense is an important article in the true Democratic faith.”
Cleveland was so committed to the Constitution that he vetoed more bills per year than any other president. Although Franklin Roosevelt vetoed a total of 635 bills, he was president for three full terms and part of a fourth. Cleveland vetoed 414 bills in his first term — more than twice as many as all of his presidential predecessors combined — and 170 bills in his second term. His most famous veto, which occurred in 1887, supremely illustrated his commitment to a philosophy of limited government. Congress passed the Texas Seed Bill to appropriate $10,000 for the purchase of seed grain for some farmers in certain Texas counties who had lost their crops due to a drought. Cleveland stated in his veto message:
I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadily resisted, to the end that the lesson should be constantly enforced that, though the people support the Government, the Government should not support the people.
During Cleveland’s presidency, the federal government’s revenue came primarily from two sources: (1) internal excise taxes on certain items, most notably tobacco and whiskey, and (2) tariffs on imports, which accounted for about 60 percent of total revenue. The only tariff Cleveland supported was a revenue tariff, not a tariff for the protection of industry. But he also favored lowering the tariff rates to “relieve the people of unnecessary taxation” and argued that high tariffs raised prices and resulted in retaliation by other countries. After his second term ended, Cleveland accused the protectionist Republicans of acting like “merchants of treachery” when they passed the Dingley Tariff of 1897, which raised tariff rates substantially.
Although Presidents Warren Harding and Calvin Coolidge were decent as far as presidents go, they did not have the commitment to classical liberalism that Cleveland did. He was the last true “liberal” president in the original sense of the term.
Donald Trump
Donald John Trump (b. 1946) was born in the New York borough of Queens to a real estate developer. He attended private schools before enrolling in Fordham University and then transferring to the Wharton School of the University of Pennsylvania, where he earned a bachelor’s degree in economics. He joined the family real estate business and later expanded The Trump Organization’s holdings to casinos, airlines, beauty pageants, clubs, football teams, and television shows, but along the way had several bankruptcies. His net worth was estimated by Forbes in 2024 to be $2.3 billion.
Trump’s contrasts are endless. In 2024, he became the first U.S. president to be convicted of a felony, but he was also named Time magazine’s “person of the year.” As president, he was impeached by the House twice but acquitted by the Senate both times. He is also all over the map politically, registering throughout his life as a Republican, a member of the Independence Party, the Reform Party, a Democrat, and unaffiliated. He was elected to the presidency without ever serving in the military or holding a government office on any level.
Trump has been criticized from the left as being a racist, a misogynist, a xenophobe, and a homophobe who is a fascist with dictatorial ambitions. But even from the right, his critics — like David Stockman, President Reagan’s OMB director — have said: “He is a blatantly narcissistic loudmouth who has zero charisma and personal appeal as a candidate. Neither has Trump offered even a semblance of a coherent program to remediate the acute economic and fiscal challenges facing the nation at home and the utter disarray of the American Empire abroad.” But like President Cleveland, what we are really interested in is Trump’s commitment to constitutional and libertarian principles. The problem is, unlike Cleveland, Trump doesn’t really have any such commitment.
The Constitution nowhere authorizes the federal government to have anything to do with health care, retirement, welfare, education, foreign aid, or drugs. Yet, Trump supports the federal government having a role in every one of these areas.
Trump is not only a drug warrior but believes that the penalties for drug dealing should be “very, very severe,” and he has even talked about the death penalty for drug dealers.
Trump has been a vocal critic of the Affordable Care Act (Obamacare) but not because the federal government shouldn’t have anything to do with health care or health insurance. Trump wants to replace Obamacare with his own government health care plan that includes price controls and government mandates to ensure that “Americans with pre-existing conditions can obtain the insurance of their choice at affordable rates.”
Trump has vowed to not cut a single penny from Social Security or Medicare and protect these socialistic and unconstitutional programs for seniors. Yet, these are the two largest mandatory spending programs of the federal government. The federal budget cannot be cut in any meaningful way without making cuts to these programs.
When Trump took office the first time, there were about 80 means-tested welfare programs that provide cash, food, housing, utility subsidies, medical care, and social services to poor, disabled, and lower-income Americans on the basis of the beneficiary’s income or assets. When Trump left office, the United States still had about 80 means-tested welfare programs.
Although Trump has talked about abolishing the Department of Education, he has also proposed expanding eligibility for Pell Grants, continuing the National School Lunch Program, and increasing funding for child care and early learning. He has advocated cutting “federal funding for any school pushing critical race theory, radical gender ideology, and other inappropriate racial, sexual, or political content on our children.” But what about schools that don’t push such things? Separating education from the state as a matter of constitutional or libertarian principles is not the basis of anything that Trump has said regarding education.
Trump has criticized foreign aid but included foreign aid spending in his budgets when he was president the first time. He has no philosophical objection to foreign aid spending as long as it is not given to “shithole” countries or countries that “do nothing for us.”
One of the main issues that sets Trump firmly apart from Cleveland is tariffs. Whereas Cleveland deplored protective tariffs and sought a reduction in tariff rates even though there was no income tax, Trump champions protective tariffs in addition to the income tax. He has said that because free trade is not “fair,” America has been taken to the cleaners by her trading partners, America has been ripped off by the world, American jobs have been stolen, and American wealth has been plundered. He believes that trade deficits are the root of all evil. Trump — despite his degree in economics — completely misunderstands the nature of trade. Trade is not a national game in which some countries win and others lose. Trade does not take place between countries but rather between individuals and businesses and between producers and consumers. It is never a zero-sum game in which one side gains at the expense of the other. Trade is always a win-win proposition. In every exchange, each party gives up something it values less for something it values more. Each party anticipates a gain from an exchange, or it wouldn’t engage in commerce with the other party. When it comes to the subject of trade, Trump is an ignorant protectionist and incoherent economic nationalist. He claims that “trade wars are good, and easy to win,” although it is American consumers who will ultimately be paying his tariffs.
When he was president the first time, Trump did nothing to rein in federal spending even though he had Republican majorities in both houses of Congress for the first two years of his presidency. Under Trump, the federal budget deficit increased by almost 50 percent, and the U.S. national debt increased by almost 40 percent. Trump only vetoed only a pathetic ten bills in the four years he was president. Because Trump is averse to cutting the three most expensive things in the federal budget (Social Security, Medicare, and defense), any recommendations to cut waste, fraud, and abuse made by his unofficial Department of Government Efficiency (DOGE) won’t result in any significant decrease in the federal budget — if they are even implemented.
Conclusion
The conclusion is inescapable: Donald Trump is no Grover Cleveland. In historical rankings by political scientists and presidential scholars, Trump always appears in the bottom five and is often ranked dead last. I agree with Trump supporters that much of this is political bias. However, Cleveland never makes the top 10 and rarely makes the top 20. Until Trump was elected to a second nonconsecutive term, Cleveland was generally known for being the only president ever elected to two nonconsecutive terms — and that’s it. Now that Trump has also accomplished such a feat, we can only hope that perhaps Americans will be prompted to take a closer look at the first president to do so. Cleveland’s commitment to constitutional and libertarian principles should be a model for Trump and all future presidents to pattern their administrations after.
This article was originally published in the March 2025 issue of Future of Freedom.
Why Are Some Libertarians So Concerned about Tax Loopholes?
https://mises.org/power-market/why-are-some-libertarians-so-concerned-about-tax-loopholes
The passage of Trump’s “one big, beautiful bill” has once again raised the issue of tax loopholes.
The One Big Beautiful Bill Act (OBBBA) was signed into law by President Trump on July 4. It includes a number of provisions related to income taxes. It increases the standard deduction, introduces a temporary increased extra standard deduction for seniors, temporarily exempts earnings from overtime and tips from income tax, raises the child tax credit and makes it permanent, temporarily increases the SALT deduction, phases out clean energy tax credits, allows taxpayers to temporarily deduct car loan interest payments, raises taxes on university endowments, and raises the estate tax exemption.
There are two ways the federal tax code reduces the amount of income tax paid to the government. Tax deductions reduce the amount of one’s income subject to tax. One will pay less in income tax the greater the number, and the greater the amount, of deductions that one qualifies for.
Tax credits are a bit different. They reduce the amount of one’s income tax owed. Regular tax credits may reduce the tax owed to zero, but if there is no taxable income to begin with, then no credit can be taken. Refundable tax credits are treated as a payment from the taxpayer like federal income tax withheld or estimated tax payments. However, if the tax credit “payment” is more than the tax owed after the regular tax credits are applied, then the “taxpayer” receives a “refund” of money he never actually paid in.
Tax deductions and credits (unless they are refundable) are always a good thing because they allow Americans to keep more of their money out of the hands of the federal government. They are not “loopholes” that need to be closed. Eliminating or reducing the value of tax deductions or credits has the same effect as raising tax rates: more taxes paid to the government. Any attempt to eliminate or reduce tax deductions or credits should be seen as support for raising taxes, no matter what justifications are put forth by some libertarians.
According to the IRS, as a result of the OBBBA, for tax years 2025 through 2028, qualified tips up to $25,000 are tax deductible, overtime pay (the “half” portion of “time-and-a-half” compensation) up to $12,500 ($25,000 for joint filers) is tax deductible, and interest on car loans up to $10,000 is tax deductible. These deductions are available for both itemizing and non-itemizing taxpayers. However, the tip and overtime deductions phase out “for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)” and the interest deduction phases out “for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).” Also effective for tax years 2025 through 2028, “individuals who are age 65 and older may claim an additional deduction of $6,000” that is “in addition to the current additional standard deduction for seniors under existing law.” However, the deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers). Another temporary provision of the OBBBA is an increase in the State and Local Tax (SALT) deduction to $40,000 for five years. Permanent provisions include an increase in the child tax credit to $2,200 and an increase in the estate tax exemption to $15 million.
In addition to loopholes instituted or perpetuated by the OBBBA, some libertarians perpetually harp on the exemption for municipal bond interest and the health-care exclusion.
Municipal bonds are financial instruments issued by state and local government entities, typically to fund public projects. The income they generate is generally exempt from federal income tax and state and local taxes.
The health-care exclusion refers to employer-paid health insurance premiums being exempt from federal income and payroll taxes instead of being treated as taxable income to the employee. Some libertarians consider this to be the worst loophole in the tax code because it costs the federal government hundreds of billions of dollars each year. These libertarians naĂŻvely just assume that absent the health-care exclusion, employers would redirect their spending on health-care insurance premiums to employees so that they can control all their earnings.
Libertarians who say that certain tax deductions and credits are loopholes that need to be closed argue that these loopholes distort the tax code, are inefficient, subsidize high-income taxpayers, interfere with the free market, and encourage people to make economically unwise decisions.
They may be all those things and more, but what is the effect of reducing, phasing out, or eliminating them? The effect is higher taxes and more revenue for Uncle Sam.
Austrian economist Murray Rothbard referred to the idea of a tax loophole that needs to be closed as a great economic myth:
A deduction or exemption is only a “loophole” if you assume that the government owns 100% of everyone’s income and that allowing some of that income to remain untaxed constitutes an irritating “loophole.” Allowing someone to keep some of his own income is neither a loophole nor a subsidy.
Only those who think that the government has an absolute right to a percentage of all income produced and that tax deductions and credits deprive the government of its claim to that percentage could object to individuals holding on to more of their money.
Americans are quadruple taxed on their income. First, there is the federal income tax. Second, on the same income, there is the Social Security tax of 12.4 percent (split equally between employers and employees) on the first $176,100 of employee income. Third, on the same income, there is the Medicare tax of 2.9 percent (split equally between employers and employees) on every dollar of employee income. And fourth, on the same income, there is state income tax in 41 states.
It is too bad that libertarians who are so adamant about tax loopholes being closed don’t expend the same amount of energy making the case for lower tax rates, the canceling of refundable tax credits, the repeal of payroll taxes, and the elimination of the income tax altogether.
Because Trump’s tariffs could never raise enough money to replace the income tax, because the income tax is not going to be repealed any time soon, and because taxation is theft, libertarians should support increasing the size and scope of every possible tax credit, deduction, and loophole since they are some of the few ways that Americans can hang on to more of their money.
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