Rothbard A to Z
TARIFFS
TARIFFS
Tariffs and various forms of import quotas prohibit, partially or totally, geographical competition for various products. Domestic firms are granted a quasi monopoly and, generally, a monopoly price. Tariffs injure the consumers within the “protected” area, who are prevented from purchasing from more efficient competitors at a lower price. They also injure the more efficient foreign firms and the consumers of all areas, who are deprived of the advantages of geographic specialization. In a free market, the best resources will tend to be allocated to their most value-productive locations. Blocking interregional trade will force factors to obtain lower remuneration at less efficient and less value-productive tasks.
Man, Economy, and State with Power and Market, p. 1101
The arguments for tariffs have one thing in common: they all attempt to prove that the consumers of the protected area are not exploited by the tariff. These attempts are all in vain.
Man, Economy, and State with Power and Market, p. 1102
TAXES
Taxation, then, is the coercive imposition of a burden upon the members of the public for the benefit of the government, or, more precisely, of the ruling class in command of the government. …
… taxes are a burden coercively imposed on society by the “ruling power.”
Classical Economics, pp. 41–42
… taxation cripples rather than stimulates production, since it robs people of resources that they would rather use differently …
Classical Economics, p. 42
… it is absurd to hold that “voluntary coercion” can be a demonstrated preference. If the decision were truly voluntary, no tax coercion would be necessary—people would voluntarily and publicly agree to pay their share of contributions to the common project.
Economic Controversies, p. 327
Taxes are parasitic and statist; they cripple energies, savings, and production. Taxes invade and aggress against the rights of private property. The higher the taxes, the more the economy becomes socialistic; the lower they are, the closer the economy approaches true freedom and genuine privatization, which means a system of complete rights of private property.
Economic Controversies, p. 436
… there is no tax or system of taxes that could be neutral to the market.
Economic Controversies, p. 438
… all government activities necessarily divert incomes, resources, and assets from the market, and therefore that the quest for a neutral tax or expenditure policy is an impossible one and the concept a myth.
Economic Controversies, p. 449
The idea that taxation is voluntary seems to be endemic among economists and social scientists, though hardly so among the general public. But if an individual refuses to pay his assigned tax, coercion will be wielded against him, and if he resists the confiscation of his property he will be shot or jailed. Failure to pay taxes subjects one to civil and criminal penalties.
Economic Controversies, p. 461
Taxation, whatever its size or incidence, must distort market processes, must alter the allocation and distribution of assets, incomes, and resources.
Economic Controversies, p. 463
… taxes are compulsory and not voluntary …
Economic Controversies, p. 495
The equal tax, or “poll tax,” is surely a far closer approximation to neutral taxation than any of the more common forms of taxation. …
But even the equal tax cannot be said to be neutral to the market.
Economic Controversies, p. 498
Taxation, the heart and soul of government …
Economic Controversies, p. 500
The idea that taxation, and therefore government’s fiscal operation, should be neutral to the market—should not disturb the operations of the market nor divert it from its free course—is a noble but impossible one.… taxation can never be neutral to the market, and the impossibility of this dream is rooted in the very nature of taxation and government. Neutral taxation is merely a chimera. …
… neutral taxation is an oxymoron … the free market and taxation are inherently incompatible …
Economic Controversies, p. 501
We have to stop looking at taxes as a mighty system for achieving social goals, which merely needs to be made “fair” and rational in order to usher in Utopia. We have to start looking at taxation as a vast system of robbery and oppression, by which some people are enabled to live coercively and parasitically at the expense of others. We must realize that from the point of view of justice or of economic prosperity, the less people are taxed, the better. That is why we should rejoice at every new loophole, new credit, new manifestation of the “underground” economy.… Every economic activity that escapes taxes and controls is not only a blow for freedom and property rights; it is also one more instance of a free flow of productive energy getting out from under parasitic repression.
Economic Controversies, p. 512
… we should look at the free-market system of one price for a good or service. We might then suggest a system not of equal proportional income tax, but of equal tax, period.
Economic Controversies, p. 513
The principle should be clear: to support all reductions in taxes, whether they be by lower rates or widening of exemption and deductions; and to oppose all rate increases or exemption decreases. In short, to seek in every instance to remove the blight of taxation as much as possible.
Economic Controversies, p. 514
… no one can seriously maintain that an income tax deprived of withholding power, could be collected at its present high levels.
Economic Controversies, p. 516
Income taxes are collected in the course of a coercive and even brutal examination of virtually every aspect of every taxpayer’s life by the all-seeing, all-powerful Internal Revenue Service.
Economic Controversies, p. 517
Surely a sales tax, other things being equal, is manifestly both simpler, less distorting of resources, and enormously less bureaucratic and despotic than the VAT. Indeed the VAT seems to have no clear advantage over the sales tax …
Economic Controversies, p. 519
The consumption tax … can only be regarded as a payment for permission to live. It implies that a man will not be allowed to advance or even sustain his own life, unless he pays, off the top, a fee to the State for permission to do so.
Economic Controversies, p. 519
… it is therefore incorrect to say that an income tax levies an extra burden on savings and investment; it penalizes an individual’s entire standard of living, present and future. An income tax does not penalize saving per se any more than it penalizes consumption.
… A consumption tax is just as disruptive of voluntary time preferences and market allocations as is a tax on savings.
Economic Controversies, p. 524
… a consumption tax will devolve, willy-nilly, into a tax on income and therefore on savings as well. In short, that even if, for the sake of argument, we should want to tax only consumption and not income, we should not be able to do so.
Economic Controversies, p. 525
… the general assumption that a sales tax can be readily shifted forward to the consumer is totally fallacious. In fact, the sales tax cannot be shifted forward at all!
… all prices are determined by the interaction of supply, the stock of goods available to be sold, and by the demand schedule for that good.… Prices are already at highest net income levels for each firm. Any increase in cost, therefore, will have to be absorbed by the firm; it cannot be passed forward to the consumers. Put another way: the levy of a sales tax has not changed the stock already available to the consumers; that stock has already been produced. Demand curves have not changed, and there is no reason for them to do so. Since supply and demand have not changed, neither will price.
Economic Controversies, p. 527
… the seemingly common-sense view that a retail sales tax will readily be shifted forward to the consumer is totally incorrect. In contrast, the initial impact of the tax will be on the net incomes of retail firms. Their severe losses will lead to a rapid downward shift in demand curves, backward to land and labor, i.e., to wage rates and ground rents. Hence, instead of the retail sales tax being quickly and painlessly shifted forward, it will, in a longer-run, be painfully shifted backward to the incomes of labor and landowners. Once again, an alleged tax on consumption has been transmuted by the processes of the market into a tax on incomes.
Economic Controversies, p. 528
… taxes, over time, cripple production …
Economic Controversies, p. 531
Since income taxes are levied on money income, people tend to shift as much income as possible from monetary to non-monetary forms.
Economic Controversies, p. 536
… higher capital gains taxation will strike hardest and foremost at the new, young, venture capitalists going into high-risk, progressive industries. Heavy capital gains taxation will strike a deadly blow precisely at new, high-risk venture capital.
Economic Controversies, p. 538
A tax on wealth directly confiscates property and brings about a decline in the structure of capital and hence of everyone’s standard of living.
Economic Controversies, p. 540
There is no existing entity called a “corporation” that feels, works, thinks, earns income, and then enjoys that income. A “corporation” is only a label for individuals who organize themselves, and hope to earn income, in certain ways. There is no income-earning thing called a “corporation” that exists and earns income above and beyond the people, that is, the stockholder-owners, who constitute that corporation. Therefore, a tax on corporate income is an unjust and “unfair” (if I may use that term) double tax on the same income, as well as a tax hitting at savings and investment … end double taxation, and cut the corporate tax to zero.
Economic Controversies, p. 541
… there ain’t no such thing as a fair tax …
… by its very nature, taxation is coercive.… So what then is a “fair” tax? I submit that the concept simply doesn’t apply.
Economic Controversies, p. 544
… we should set about trying to minimize tax sufferings as much as we can …
Economic Controversies, p. 545
People are, or should be, interested in lowering their own tax burden rather than enviously trying to aggravate the burdens of other people.… all of us are paying too much.
Economic Controversies, p. 545
… there are worse things in the world than complexity. And one of them is paying higher taxes.
Economic Controversies, p. 547
Denouncing tax lawyers and accountants is like blaming doctors for the existence of disease, or attacking expenditures on guards, locks, and fences for protecting oneself against crime. Our complaint should not be with tax lawyers and accountants, but with the system that makes them necessary. So long as that system exists, we must realize that they are our shield and our buckler, our defense against the depredations of the tax system.
Economic Controversies, p. 548
… the flat tax is neither evidently fair nor genuinely simple nor neutral to the market … it is merely a snare and a delusion for more confiscatory taxation …
Economic Controversies, p. 548
… the progressive income tax destroys the capital structure and the standard of living of society.
Economic Controversies, p. 555
How are all prices of goods set on the market? They are set on the basis of one price for each good, regardless of the incomes of the people on the market. A pound of butter costs the same to a poor man as to a rich man.… if it is the rule of justice to be neutral with regard to the market, then taxing will take place as nearly as possible on a market basis; it too would tax each person equally. If the government taxes the rich more heavily—in amount, not in “proportion”—than the poor, it is not being neutral …
Economic Controversies, p. 563
… the inheritance tax is a pure tax on capital. It does not tax income at all. It is a pure tax on accumulated capital, and thus leads directly to impoverishment. Not only that, but it is a pure tax on that very form of endeavor that provides the main incentive for long-range accumulation of capital after a man’s death—the bequest to one’s children. It is therefore a staggering tax on capital. Not only should there be no progressive inheritance tax, there should be no inheritance tax at all. An inheritance tax is pure evil, and no valid arguments can be found for it.
Economic Controversies, p. 569
The VAT is, in short, a looming gigantic swindle …
Economic Controversies, p. 589
… taxes never go down. Government, in its insatiable quest for new funds, never relaxes its grip on any source of revenue.
Economic Controversies, p. 589
… the VAT is in many ways far worse than a sales tax …
Economic Controversies, p. 590
The only way to reduce Big Government is to cut its tax revenue …
Economic Controversies, p. 592
A 100 percent tax on land values will generate chaos in land and therefore in production generally …
Economic Controversies, p. 596
In contrast to voluntary exchange, taxation is a matter of leaping in and coercively seizing people’s property without their consent.
… Taxation, then, is purely and pristinely robbery. Period.
… I challenge any of you to sit down and work out a definition of taxation that would not also be applicable to robbery.
Economic Controversies, p. 674
From the point of view of the state and its rules, the people are but a giant goose to be plucked as efficaciously as possible.
Economic Thought Before Adam Smith, p. 246
Taxation is theft, purely and simply …
Ethics of Liberty, p. 162
Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects.
It would be an instructive exercise for the skeptical reader to try to frame a definition of taxation which does not also include theft. Like the robber, the State demands money at the equivalent of gunpoint; if the taxpayer refuses to pay his assets are seized by force, and if he should resist such depredation, he will be arrested or shot if he should continue to resist.
Ethics of Liberty, pp. 162–63
… there can be no such thing as a “neutral” tax, a taxing system that will be neutral to the market as it would have been without taxation.
Ethics of Liberty, p. 176
Anyone who truly believes in the “voluntary” nature of taxation is invited to refuse to pay taxes and to see what then happens to him.… only libertarians are prepared to call taxation what it is: legalized and organized theft on a grand scale.
For a New Liberty, p. 30
… anyone who persists in thinking of taxation as in some sense a “voluntary” payment can see what happens if he chooses not to pay.
For a New Liberty, p. 62
How can you define taxation in a way which makes it different from robbery?
For a New Liberty, p. 63
… taxation, of income, property, or whatever, is the exclusive monopoly of government. No other individual or organization enjoys the privilege of taxation, of acquiring its income by coercion.
For a New Liberty, p. 90
In a sense, the entire system of taxation is a form of involuntary servitude.
For a New Liberty, p. 104
We must work toward repeal of the income tax and abolition of the IRS.
Irrepressible Rothbard, p. 40
The first great lesson to learn about taxation is that taxation is simply robbery. No more and no less. For what is “robbery”? Robbery is the taking of a man’s property by the use of violence or the threat thereof, and therefore without the victim’s consent. And yet what else is taxation?
Those who claim that taxation is, in some mystical sense, really “voluntary” should then have no qualms about getting rid of that vital feature of the law which says that failure to pay one’s taxes is criminal and subject to appropriate penalty. …
But if taxation is robbery, then it follows as the night the day that those people who engage in, and live off, robbery are a gang of thieves. Hence the government is a group of thieves, and deserves, morally, aesthetically, and philosophically, to be treated exactly as a group of less socially respectable ruffians would be treated.
Libertarian Forum v. 1, p. 9
An excess profits tax is a particularly bizarre form of government intervention.… since profits are earned in proportion to the speed and efficiency by which the business firms adapts to the new event, this means that corporations are penalized precisely in proportion to their success in adapting to the new conditions. A firm that meets the new conditions successfully earns profits and would be penalized by a severe tax; while the firm that sluggishly fails to adapt or to produce the newly-demanded product, suffers no penalizing tax at all.… No better way can be found to cripple the efficiency and flexibility of the free enterprise system than an excess profits tax.
Libertarian Forum v. 1, p. 442
… a tax is only used to build up the coercive machinery of the Leviathan State. It is incumbent, then, on any libertarian or free-market economist worthy of the name, to advocate any tax cut anywhere, and thereby a cut in coercion and parasitic burdens on the economy.
Libertarian Forum v. 1, p. 509
On principle, taxation is theft, and any reduction in taxation whatsoever must be welcomed as allowing producers and individuals to keep more of their own money. Furthermore, in the long run, this can only help the economy by shifting production toward the desires of private consumers … any tax cut will have a beneficial effect, morally and economically, in both the long and the short run.
… hooray for any tax cuts, anywhere, in any area!
Libertarian Forum v. 1, p. 533
We must push for property tax cuts, for sales tax cuts, for income tax cuts, for cuts everywhere, and then, to copper-rivet the slashes by pushing for balanced budget amendments to cut government spending. (A balanced budget amendment without mandated slashes in taxes will bring about disastrous tax raises, and thereby increase statism.)
Libertarian Forum v. 2, p. 837
Rebellion against taxes is an old American tradition.
Libertarian Forum v. 2, p. 844
… engine of organized theft and oppression.
Libertarian Forum v. 2, p. 926
Libertarians are nothing if not anti-taxation …
Libertarian Forum v. 2, p. 951
… all tax credits distort the economy by pushing people in the direction of spending toward which the government would like them to go … Still, tax credits are excellent, but only insofar as they lower taxes; our ultimate objective should clearly be to eliminate taxation altogether.
Libertarian Forum v. 2, p. 952
Taxes should never be raised under any circumstances. They should always be cut, anywhere and everywhere. Why? First and foremost, because taxation is theft, and the more people are allowed to keep their own money the better. Second, because a price, no matter how high, is always better than a tax. Consumers paying high prices, no matter how distraught by inflation, are at least getting some goods and services for their inflated money. But the taxpayer gets nothing from his coerced payment except grief and the buildup of an oppressive State Leviathan. Taxes are never justifiable. And third, strategically, as Milton Friedman often points out, the only way the government can be forced to reduce its spending is by cutting off its water and lowering taxes.
Libertarian Forum v. 2, p. 1003
“Bracket creep” is the sinister process by which the federal government gives a devastating one-two punch to the average American. The first punch is the Federal Reserve printing more money every year, thereby driving up prices and extracting more resources from the private and productive sector. The second punch comes as Fed-created inflation raises prices and incomes across-the-board. For as it does so, the average person is wafted up into a higher tax bracket, and has to pay a higher percentage of his income in taxes.
Libertarian Forum v. 2, p. 1003
The pernicious concept of “closing loopholes” echoes the old liberal notion that any amount of one’s earnings that the government graciously allows one to keep is a “loophole” which deserves to be “closed” by Uncle Sam.
Libertarian Forum v. 2, p. 1006
… the monstrous withholding provision (put in during World War II as a “wartime emergency” measure, the details of which were worked out by Milton Friedman, then in the Treasury Department) is the key to the success of the income tax plunder.
Libertarian Forum v. 2, p. 1010
… there can be no such thing as “fairness in taxation.” Taxation is nothing but organized theft, and the concept of a “fair tax” is therefore every bit as absurd as that of “fair theft.” … taxation is a system whereby the State robs everyone else, rich, middle, and poor. Taxation is robbery …
Libertarian Forum v. 2, p. 1034
… we seek not only repeal of the income tax, but of all taxes!
Libertarian Forum v. 2, p. 1144
If a tax were levied like a market price, it would be equal to every “customer,” not proportionate to each customer’s income
Making Economic Sense, pp. 16–17
… wherever there is production, there is also parasitic classes living off the producers.
Making Economic Sense, p. 85
… increased taxes discourage supply and drive firms out of business.
Making Economic Sense, p. 155
Whooping it up for higher taxes is the moral equivalent of some Ugandan theoretician of a few years ago publicly urging Idi Amin to pile on his looting and his despotism still further, or of a Mafia consigliere advising the capo to add an extra ten percent to the “protection fee” imposed on neighborhood stores. We can think of many names for this sort of activity, but “courage” is surely not one of them.
Making Economic Sense, p. 222
… there are things in this life worse than complexity, and one of them is paying more taxes. Complexity is good if it allows you to keep more of your own money.
Making Economic Sense, pp. 224–25
There is … a good reason for our paying money to tax lawyers and accountants. Spending money on them is no more a social waste than our purchase of locks, safes, or fences. If there were no crime, expenditure on such safety measures would be a waste, but there is crime. Similarly, we pay money to the lawyers and accountants because, like fences or locks, they are our defense, our shield and buckler, against the tax man.
Making Economic Sense, p. 226
… on the market there is a strong tendency for a good to be priced the same throughout the market; one good, one price. It would be far more neutral to the market, indeed, for everyone to pay, not the same tax in proportion to his income, but the same tax as everyone else, period. Everyone’s tax should therefore be equal.
Making Economic Sense, p. 228
Tax cuts are good in a recession, or any other time. …
Tax cuts are good at any time, especially for the long run.
Making Economic Sense, p. 267
For years, writers on public finance have been searching for the “neutral tax,” i.e., for that system of taxes which would keep the free market intact. The object of this search is altogether chimerical.
Man, Economy, and State with Power and Market, p. 908
The tax-and-expenditure process, therefore, will inevitably distort the allocation of productive factors, the types of goods produced, and the pattern of incomes, from what they would be on the free market. The larger the level of taxing and spending, i.e., the bigger the government budget, the greater the distortion will tend to be.
Man, Economy, and State with Power and Market, p. 909
The greater the amount of taxes imposed on the producers—the taxpayers—the lower the marginal utility of work will be, for the returns from work are forcibly diminished, and the greater the marginal utility of leisure forgone.
Man, Economy, and State with Power and Market, p. 914
The income tax, by taxing income from investments, cripples saving and investment, since it lowers the return from investing below what free-market time preferences would dictate.
Man, Economy, and State with Power and Market, pp. 915–16
… an income tax will shift the social proportion toward more consumption and less saving and investment.
Man, Economy, and State with Power and Market, p. 917
… penalizes the individual’s entire standard of living …
Man, Economy, and State with Power and Market, p. 918
The free market determines an intricate, almost infinite array and structure of prices, rates, and incomes. The imposition of different taxes disrupts these patterns and cripples the market’s work of allocating resources and output.
Man, Economy, and State with Power and Market, p. 919
… the quest for a neutral tax—a tax neutral to the market, leaving the market roughly as it was before the tax was imposed—is a hopeless venture. For there can be no uniformity in paying taxes when some people in society are necessarily taxpayers, while others are privileged tax-consumers.
Man, Economy, and State with Power and Market, p. 920
… the progressive tax penalizes the able and efficient in even greater proportion than their relative ability and efficiency. Progressive rates are a particular disincentive against especially able work or entrepreneurship. And since such ability is engaged in serving the consumer, a progressive tax levies a particular burden on the consumers as well. …
… the progressive principle is certainly highly destructive of the market …
Man, Economy, and State with Power and Market, p. 925
Of all the possible types of taxes, the one most calculated to cripple and destroy the workings of the market is the excess profits tax.… With the drive for profit crippled, profit and loss no longer serve as an effective incentive, or, therefore, as the means for economic calculation in the market economy.
Man, Economy, and State with Power and Market, p. 926
The idea that the increased cost will be passed on to the consumer by the employer is an illustration of perhaps the single most widespread fallacy on taxation: that businessmen can simply shift their higher costs forward onto the consumers in the form of higher prices.… price of a given product is set by the demand schedules of the consumers. There is nothing in higher costs or higher taxes which, per se, increases these schedules; hence, any change in selling prices, whether higher or lower, will decrease the revenues of the business involved.… higher taxes or other costs imposed on the firm will reduce their net incomes rather than be smoothly and easily passed on to consumers.… No tax (not just an income tax) can ever be shifted forward.
Man, Economy, and State with Power and Market, pp. 928–29
… a sales tax is a tax on incomes …
Man, Economy, and State with Power and Market, p. 931n45
… a tax on wages will distort the allocation of labor effort, a tax on profits will cripple the profit-and-loss motor of the economy, a tax on interest will tend to consume capital …
Man, Economy, and State with Power and Market, pp. 934–35
The sales tax is commonly supposed to penalize consumption, rather than income or capital. Yet we find that the sales tax reduces, not just consumption but the incomes of original factors. The general sales tax is therefore an income tax, albeit a rather haphazard one.… The major effect of the general sales tax will be that of the income tax—to reduce the consumption and the saving-investment of the taxpayers. In fact, since, as we have seen, the income tax by its nature falls more heavily on savings-investment than on consumption, we reach the paradoxical and important conclusion that a tax on consumption will fall more heavily on savings-investment than on consumption in its ultimate incidence.
Man, Economy, and State with Power and Market, pp. 933–34
… an income tax will shift the pattern of exchanges between subjects from what it otherwise would have been.
Man, Economy, and State with Power and Market, p. 1060
Taxation is a coerced levy that the government extracts from the populace …
Man, Economy, and State with Power and Market, p. 1149
No tax can be truly neutral; every one will cause distortion. Neutrality can be achieved only on a purely free market …
Man, Economy, and State with Power and Market, p. 1154
No tax can be shifted forward. In other words, no tax can be shifted from seller to buyer and on to the ultimate consumer.… The price of a good is determined by its total stock in existence and the demand schedule for it on the market. But the demand schedule is not affected at all by the tax.… A tax, therefore, cannot be passed on to the consumer.
Man, Economy, and State with Power and Market, p. 1156
… a sales tax can and will be shifted completely from investment and back to the original factors. The result of a general sales tax is a general reduction in the net revenue accruing to original factors: to all wages and ground rents. The sales tax has been shifted backward to original factor returns. …
… the tax has ultimately been levied on the incomes of original factors.
Man, Economy, and State with Power and Market, p. 1159
The general sales tax is an income tax …
Man, Economy, and State with Power and Market, p. 1161
Everyone in the market suffers as a result of an excise tax …
… the excise tax also has the same general effect as all other taxes, viz., that the pattern of market demands is distorted from private to government or government-subsidized wants by the amount of the tax intake. …
… The excise tax is also a tax on incomes …
Man, Economy, and State with Power and Market, pp. 1162–63
An income tax cannot be shifted to anyone else. The taxpayer himself bears the burden.… Income taxation reduces every taxpayer’s money income and real income, and hence his standard of living. His income from working is more expensive, and leisure cheaper, so that he will tend to work less. Everyone’s standard of living in the form of exchangeable goods will decline.
Man, Economy, and State with Power and Market, pp. 1164–65
… the income tax tends to bring about a reduction in specialization and a breakdown of the market, and hence a retrogression in living standards. Make the income tax high enough, and the market will disintegrate altogether, and primitive economic conditions will prevail.
Man, Economy, and State with Power and Market, pp. 1165–66
Any tax levied particularly on their consumption, therefore, is just as much a distortion and invasion of the free market as a tax on their savings. …
… attempts to tax consumption in the form of sales or production taxation must fail and end as levies on incomes instead.
Man, Economy, and State with Power and Market, pp. 1170–71
The corporate income tax greatly hampers the adjustment of the economy to dynamic changes in conditions.
Man, Economy, and State with Power and Market, p. 1173
A penalty tax on “excess” business income directly penalizes efficient adjustment of the economy.… It is difficult to find a tax more indefensible from more points of view than this one.
Man, Economy, and State with Power and Market, pp. 1173–74
Even if it were desirable for the government to encourage saving at the expense of consumption, taxing consumption would not do so.
Man, Economy, and State with Power and Market, p. 1181
A consumption tax is always shifted so as to become an income tax …
… there can be no tax on consumption alone; all consumption taxes resolve themselves in one way or another into taxes on incomes.
Man, Economy, and State with Power and Market, pp. 1182–83
Accumulated capital, on the contrary, is our heritage from the past; it is the accumulation of tools and equipment and resources from which our present and future standard of living derive. To tax this capital is to reduce the stock of capital, especially to discourage replacements as well as new accumulations, and to impoverish society in the future.
Man, Economy, and State with Power and Market, p. 1184
An inheritance tax, therefore, is a pure tax on capital. Its impact is particularly devastating because (a) large sums will be involved, since at some point within a few generations every piece of property must pass to heirs, and (b) the prospect of an inheritance tax destroys the incentive and the power to save and build up a family competence. The inheritance tax is perhaps the most devastating example of a pure tax on capital.
Man, Economy, and State with Power and Market, p. 1185
… a property tax necessarily distorts the allocation of resources in production. It penalizes those lines of production in which capital equipment per sales dollar is large and causes resources to shift from these to less “capitalistic” fields. Thus, investment in higher-order productive processes is discouraged, and the standard of living lowered.
Man, Economy, and State with Power and Market, p. 1189
It is clear that the wealth tax levies a heavy penalty on accumulated wealth and that therefore the effect of the tax will be to slash accumulated capital. No quicker route could be found to promote capital consumption and general impoverishment than to penalize the accumulation of capital.
Man, Economy, and State with Power and Market, p. 1191
The progressive tax imposes a higher rate of taxation on a man earning more. In other words, it acts as a penalty on service to the consumer, on merit in the market. Incomes in the market are determined by service to the consumer in producing and allocating factors of production and vary directly according to the extent of such services. To impose penalties on the very people who have served the consumers most is to injure not only them, but the consumers as well. A progressive tax is therefore bound to cripple incentives, impair mobility of occupation, and greatly hamper the flexibility of the market in serving the consumers. It will consequently lower the general standard of living.
Man, Economy, and State with Power and Market, p. 1192
… the level of taxation is far more important than its progressiveness …
Man, Economy, and State with Power and Market, p. 1194
… the result of the [Henry George] single tax would be locational chaos, with waste and misallocation everywhere; overcrowding would prevail …
Man, Economy, and State with Power and Market, p. 1206
… it is clearly idle to look for the “just tax.” If taxation itself is unjust, then it is clear that no allocation of its burdens, however ingenious, can be declared just.
Man, Economy, and State with Power and Market, p. 1216
… there is no such thing as a “neutral tax”—a tax that will leave the market free and undisturbed—just as there is no such thing as neutral money.
Man, Economy, and State with Power and Market, p. 1216
In the long run, certainty of taxation is an impossible goal.
Man, Economy, and State with Power and Market, p. 1217
If a tax is onerous and unjust, evasion might be highly beneficial to the economy, and moral to boot.
Man, Economy, and State with Power and Market, p. 1218
It is clear that if a certain burden is unjust, blame should be levied, not on the man who escapes the burden, but on the man or men who impose it in the first place. If a tax is in fact unjust, and some are exempt from it, the hue and cry should not be to extend the tax to everyone, but on the contrary to extend the exemption to everyone.
Man, Economy, and State with Power and Market, pp. 1219–20
A tax must first be proven just; if it is unjust, then uniformity is simply imposition of general injustice, and exemption is to be welcomed. Since the very fact of taxation is an interference with the free market, it is particularly incongruous and incorrect for advocates of a free market to advocate uniformity of taxation.
Man, Economy, and State with Power and Market, p. 1220
… a tax on accumulated capital would cause general impoverishment.
Man, Economy, and State with Power and Market, p. 1224
No clear standard can be found to gauge “ability to pay.” … the decision is necessarily arbitrary.
Man, Economy, and State with Power and Market, p. 1224
… if we compare taxation with the market, we find no basis for adopting the “ability-to-pay” principle. On the contrary, the market price (generally considered the just price) is almost always uniform or tending toward uniformity. Market prices tend to obey the rule of one price throughout the entire market. Everyone pays an equal price for a good regardless of how much money he has or his “ability to pay.” Indeed, if the “ability-to-pay” principle pervaded the market, there would be no point in acquiring wealth …
Man, Economy, and State with Power and Market, p. 1229
If taxes were to be patterned after market pricing, then, taxes would be levied equally (not proportionately) on everyone.
Man, Economy, and State with Power and Market, p. 1230
… the “ability-to-pay” principle means precisely that the able are penalized, i.e., those most able in serving the wants of their fellow men. Penalizing ability in production and service diminishes the supply of the service—and in proportion to the extent of that ability. The result will be impoverishment, not only of the able, but of the rest of society, which benefits from their services.
… the “ability-to-pay” principle resembles more the highwayman’s principle of taking where the taking is good.
Man, Economy, and State with Power and Market, pp. 1230–31
The equal-sacrifice theory asks that equal hurt be imposed on all. As a criterion of justice, this is as untenable as asking for equal slavery.
Man, Economy, and State with Power and Market, p. 1232
… the equal tax would be far more nearly neutral than any of the other taxes considered, for it would attempt to establish an equal “price” for equal services rendered.
Man, Economy, and State with Power and Market, p. 1240
The market tends toward uniformity of pricing and hence toward equal pricing for equal service. Equal taxation, therefore, would be far more nearly neutral and would constitute a closer approach to a market system.
Man, Economy, and State with Power and Market, p. 1241
… no bureaucrat can pay taxes. An “equal tax” on a bureaucrat or politician is an impossibility, because he is one of the tax consumers rather than taxpayers. Even when all other subsidies are eliminated, the government employee remains a permanent obstacle in the path of equal tax. As we have seen, the bureaucrat’s “tax payment” is simply a meaningless bookkeeping device.
Man, Economy, and State with Power and Market, p. 1242
… neutral taxation is, at bottom, impossible …
Man, Economy, and State with Power and Market, p. 1245
Taxes cripple free energies, productive work and investment. The best way for government to encourage free activity in any area is to remove its own tax burdens on that area.
Science, Technology, and Government, p. 101
TECHNOLOGY
… technology, while vitally important, is only indirectly, and not directly, involved in an investment … investment is always less than the maximum amount that could possibly exploit existing technology. Therefore, the “state of technical knowledge” is not really a limiting condition to investment. We can see the truth of this by simply looking about us; in every field, in every possible line of investment, there are always some firms which are not using the latest possible equipment, which are still using older methods. This fact indicates that there is a narrower limit on investment than technological knowledge.
America’s Great Depression, pp. 70–71
New technology improves productivity, but is not essential for creating investment opportunities; these always exist, and are only limited by time preferences and available saving.
America’s Great Depression, p. 71
Technological processes do not only require inventions. They must be brought forth from the invention stage and be embodied in concrete machines and processes. But that requires savings and capital investment as well as invention.… the legal and property rights system in society, help determine whether or not saving and investment will be encouraged and discouraged. …
… machines will not be invested in, unless there is a division of labor of sufficient extent in society. Once again, the social relations, the cooperative division of labor and exchange in society, determine the extent of the development of technology, and not the other way round.
Classical Economics, p. 374
Large-scale firms tend to become bureaucratic, hidebound, and mired in intellectual and financial vested interests in existing plants and ways of production. Time after time, only new, small firms can carry out the cutting-edge of technological innovation.
Classical Economics, p. 420
Technological unemployment is an old and oft-discredited bogey.
Classical Economics, p. 424
… technology explains how they should act in order to arrive at chosen ends …
Economic Controversies, p. 35
… it is precisely modern technology that has permitted the growth of the far more populous cities of today with far greater health, ease, and comfort for each inhabitant.
Egalitarianism as a Revolt Against Nature, p. 180
The widespread attack on technology is even more irresponsible. If technology were to be rolled back to the “tribe” and to the preindustrial era, the result would be mass starvation and death on a universal scale. The vast majority of the world’s population is dependent for its very survival on modern technology and industry.
For a New Liberty, p. 305
What we need is more economic growth, not less; more and better technology, and not the impossible and absurd attempt to scrap technology and return to the primitive tribe. Improved technology and greater capital investment will lead to higher living standards for all and provide greater material comforts, as well as the leisure to pursue and enjoy the “spiritual” side of life. There is precious little culture or civilization available for people who must work long hours to eke out a subsistence living.
For a New Liberty, pp. 306–07
… the precious technical resource of scientists and engineers is being ever more intensively diverted to government, instead of to “civilian” consumer production. What we need is for government to get out of the way, remove its incubus of taxation and expenditures from the economy, and allow productive and technical resources once again to devote themselves fully to increasing the well-being of the mass of consumers.
For a New Liberty, p. 307
… the advance of modern technology makes anarchistic arrangements increasingly feasible.
Libertarian Forum v. 1, p. 536
… the limits at any time on investment and productivity are a scarcity of saved capital, not the state of technological knowledge.
Man, Economy, and State with Power and Market, p. 540
… while knowledge is a limit, capital is a narrower limit. It is logically obvious that while capital cannot engage in production beyond the limits of existing available knowledge, knowledge can and does exist without the capital necessary to put it to use. Technology and its improvement, therefore, play no direct role in the investment and production process; technology, while important, must always work through an investment of capital.
Man, Economy, and State with Power and Market, p. 542
How many workers have been “displaced” because of the invention of the shovel?
Man, Economy, and State with Power and Market, p. 587
At no time has invested capital exhausted the best technological opportunities available. Many firms still use old, unimproved processes and techniques simply because they do not have the capital to invest in new ones. They would know how to improve their plant if capital were available. Thus, while the state of technology is ultimately a very important consideration, at no given time does it play a direct role, since the narrower limit on production is always the supply of capital.
Man, Economy, and State with Power and Market, p. 626
Technological knowledge tells us of a whole host of alternatives that are open to us. But the crucial questions—in what to invest? how much? what production method to choose?—can be answered only by economic, i.e., by financial considerations.
Man, Economy, and State with Power and Market, p. 647
… innovations cannot be considered the prime mover of the economy, since innovations can work their effects only through saving and investment …
Man, Economy, and State with Power and Market, p. 856
Throughout history, no important new invention has remained a secret for long …
Science, Technology, and Government, p. 33
… conditions of modern technology do not require government control or planning of science. Quite the contrary.
Science, Technology, and Government, p. 77
… automation creates employment … our present-day technology has been a boon, rather than a handicap, to employment.
Science, Technology, and Government, p. 111
… the great creators, the great individualists, were always met with hatred and persecution by their fellow men, who in the end benefited from them.
Strictly Confidential, p. 48
… all innovations come from free individuals and not the state …
What Has Government Done to Our Money?, p. 20
THEORY
The only test of a theory is the correctness of the premises and of the logical chain of reasoning.
America’s Great Depression, p. xxxix
… economic theory should be verbal rather than mathematical.
Classical Economics, p. 15
… economic theory rests on the broadest general insights about human nature, insights that are self-evident in the sense that once stated they command universal assent.
Classical Economics, p. 148
… the burden of proof must rest on the one advancing a theory, particularly when the theory contradicts man’s primary impressions.
Economic Controversies, p. 5
… economic theory does not need to be “tested” by historical fact but also that it cannot be so tested. For a fact to be usable for testing theories, it must be a simple fact, homogeneous with other facts in accessible and repeatable classes.… each event is a complex resultant of a shifting variety of multiple causes, none of which ever remains in constant relationships with the others. Every historical event, therefore, is heterogeneous, and therefore historical events cannot be used either to test or to construct laws of history, quantitative or otherwise.
Economic Controversies, p. 74
Economic theory as has been developed is a component part of praxeology. It is deduced from the apodictic axiom of action, and most of economic theory, including the laws and implications of Uncertainty, Time Preference, the Law of Returns, the Law of Utility, etc., can be deduced directly with no further assumptions.
Economic Controversies, p. 117
Correct theory is based on the true and unrefutable axiom that human beings act, and proceeds by deducing the logical—and therefore true—implications from that formal fact.
Economic Controversies, p. 171
… there can be no divorce between theory and practice.
Economic Controversies, p. 626
… a theory that necessarily violated practical reality was an unsound theory.
Economic Controversies, p. 816
… we must challenge the very idea of a radical separation between something that is “true in theory” but “not valid in practice.” If a theory is correct, then it does work in practice; if it does not work in practice, then it is a bad theory. The common separation between theory and practice is an artificial and fallacious one. But this is true in ethics as well as anything else. If an ethical ideal is inherently “impractical,” that is, if it cannot work in practice, then it is a poor ideal and should be discarded forthwith.
Egalitarianism as a Revolt Against Nature, p. 5
… the dichotomy between “theoretical” and “practical” is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature “practical” ones as well.
Man, Economy, and State with Power and Market, p. 616
The person who identifies economic laws in practice and uses them to explain complex economic fact is, then, acting as an economic historian rather than as an economic theorist. He is an historian when he seeks the casual explanation of past facts; he is a forecaster when he attempts to predict future facts. In either case, he uses absolutely true laws, but must determine when any particular law applies to a given situation. Furthermore, the laws are necessarily qualitative rather than quantitative, and hence, when the forecaster attempts to make quantitative predictions, he is going beyond the knowledge provided by economic science.
Man, Economy, and State with Power and Market, p. 1357
TIME
Time, as well as labor, enters into capital …
Classical Economics, p. 141
All human life must take place in time. Human reason cannot even conceive of an existence or of action that does not take place through time. …
A man’s time is always scarce. He is not immortal; his time on earth is limited.
Man, Economy, and State with Power and Market, pp. 4–5
… each stage of production takes time.
Man, Economy, and State with Power and Market, p. 10
TIME PREFERENCE
The proportion of consumption to saving or investment is determined by people’s time preferences—the degree to which they prefer present to future satisfactions. The less they prefer them in the present, the lower will their time preference rate be, and the lower therefore will be the pure interest rate, which is determined by the time preferences of the individuals in society. A lower time-preference rate will be reflected in greater proportions of investment to consumption, a lengthening of the structure of production, and a building-up of capital. Higher time preferences, on the other hand, will be reflected in higher pure interest rates and a lower proportion of investment to consumption.
America’s Great Depression, pp. 9–10
… the savings-investment-consumption proportions are determined by time preferences of individuals …
America’s Great Depression, p. 39
… people prefer a good at present to the prospect of the good arriving in the future.
Economic Thought Before Adam Smith, p. 10
Capital goods are not only embodied land and labor; they are embodied land, labor, and time, while interest becomes a payment for “time.” … The primordial fact of time-preference dictates that every one will prefer to have wants satisfied now than at some point in the future, so that a present good will always be worth more than the present prospect of the equivalent future good. Hence, at any given time, future goods are discounted on the market by the social rate of time-preference.
… Time-preference and hence interest return exist apart from or even in the absence of any lending at all. …
… time-preference and interest income exist in the state of equilibrium, and not simply as a charge on loans but as a return earned by every investing capitalist.
Economic Controversies, pp. 264–65
A fundamental and constant truth about human action is that man prefers his end to be achieved in the shortest possible time. Given the specific satisfaction, the sooner it arrives, the better. This results from the fact that time is always scarce, and a means to be economized. The sooner any end is attained, the better. Thus, with any given end to be attained, the shorter the period of action, i.e., production, the more preferable for the actor. This is the universal fact of time preference. At any point of time, and for any action, the actor most prefers to have his end attained in the immediate present. Next best for him is the immediate future, and the further in the future the attainment of the end appears to be, the less preferable it is. The less waiting time, the more preferable it is for him.
Man, Economy, and State with Power and Market, p. 15
Time preference may be called the preference for present satisfaction over future satisfaction or present good over future good …
Man, Economy, and State with Power and Market, p. 15n15
… a man will always prefer obtaining a given satisfaction earlier than later.
Man, Economy, and State with Power and Market, p. 49
… the factor which holds every man back from investing more and more of his land and labor in capital goods is his time preference for present goods. If man, other things being equal, did not prefer satisfaction in the present to satisfaction in the future, he would never consume; he would invest all his time and labor in increasing the production of future goods. But “never consuming” is an absurdity, since consuming is the end of all production.
Man, Economy, and State with Power and Market, p. 51
Every person prefers and will attempt to achieve the satisfaction of a given end in the present to the satisfaction of that end in the future. This is the law of time preference.
Man, Economy, and State with Power and Market, p. 320
… the universal law of time preference holds that any given satisfaction will be preferred earlier than later, an equivalent satisfaction will be preferred as early as possible. Present consumption of a good will be given up only in anticipation of a greater future consumption, the degree of the premium being dependent on time preferences.
Man, Economy, and State with Power and Market, pp. 344–45
It follows from the law of time preference that present money is worth more than present expectations of the same amount of future money. In other words, future money (as we may call present expectations of money in the future) will always exchange at a discount compared to present money.
Man, Economy, and State with Power and Market, p. 376
… every man’s time preference is positive, i.e., one ounce of present money will always be preferred to one ounce or less of future money. Therefore, there will never be any question of a zero or negative pure interest rate.
Man, Economy, and State with Power and Market, p. 382
… after a certain point, a man’s time preference for the present becomes infinite.… At the other end of the scale, the fact of time preference will imply that at some minimum rate of interest the man will not save at all.
Man, Economy, and State with Power and Market, p. 386
It took a long while for the crucial importance of time preference in the determination of the pure rate of interest to be realized in economics; it took even longer for economists to realize that time preference is the only determining factor.
Man, Economy, and State with Power and Market, p. 389
… the time preferences of the individuals on the market determine simultaneously and by themselves both the market equilibrium interest rate and the proportions between consumption and savings …
Man, Economy, and State with Power and Market, p. 400
We cannot compare time preferences interpersonally, any more than we can formulate interpersonal laws for any other type of utilities. What we can assert as an economic law for one person we cannot assert in comparing two or more persons. Each person has his own time-preference schedule, apart from the specific size of his monetary stock. Each person’s time-preference schedule, as with any other element in his value scale, is entirely of his own making.
Man, Economy, and State with Power and Market, pp. 415–16
Praxeology can never furnish an ultimate explanation for a man’s time preferences.
Man, Economy, and State with Power and Market, p. 443
… each person has a time-preference schedule relating to his money stock. A lower money stock will cause a higher time-preference rate for any unit of money remaining in his possession, until finally his time preference rate will rise to infinity when the money stock—or rather, the money for consumption—is low enough.
Man, Economy, and State with Power and Market, p. 444
The very fact that any land is ever bought and sold, by the way, is a demonstration of the universality of time preference. If there were no time preference for the present, then an infinite series of future rents could never be capitalized. A piece of land would have to have an infinite present price and therefore could never be sold. The fact that lands do have prices is an indication that there is always a time preference and that future rents are discounted to reduce to a present value.
Man, Economy, and State with Power and Market, p. 493
… the consequence of lower time-preference rates in the society is precisely a lowering of the rate of interest. Thus, lowered time preferences mean an increased proportion of savings-investment to consumption and lead to smaller price spreads and an equivalent lowering of the rate of interest.
Man, Economy, and State with Power and Market, p. 520
TOTALITARIANISM
… totalitarianism can have many faces.
Economic Controversies, p. 549
It is usually under color of “emergency” that totalitarianism rears its ugly head.
Libertarian Forum v. 2, p. 738
… shun totalitarianism—the total commitment and subordination of one’s being to any group.
Libertarian Forum v. 2, p. 853
… anyone who advocates governmental dictation over one area of individual consumption must logically come to advocate complete totalitarian dictation over all choices.
Man, Economy, and State with Power and Market, p. 1303
TRUTH
… someone must propagate the truth in society, as opposed to what is politically expedient.
Case for a 100 Percent Gold Dollar, p. 72
Truth, understanding, reason, is surely the way to save the free market …
Economic Controversies, p. 199
… the world may have forgotten scientific truth that was once known …
Economic Controversies, p. 227
… the skeptic has no ground on which to stand to defend his or others’ liberty against assault. Since there will always be men willing to aggress against others for the sake of power or pelf, the triumph of skepticism means that the victims of aggression will be rendered defenseless against assault. Furthermore, the skeptic being unable to find any principle for rights or for any social organization, will probably cave in, albeit with a resigned sigh, to any existing regime of tyranny. Faute de mieux, he has little else to say or do.
Economic Thought Before Adam Smith, p. 201
All truth, after all, is one and interconnected.
Libertarian Forum v. 1, p. 446
In the search for the truth, and for credibility in that search, it is important to be careful and scholarly.
Libertarian Forum v. 1, p. 563
Arguments, of course, must stand on their own merits or demerits regardless of who expounds them …
Libertarian Forum v. 2, p. 870
Truth must be promoted, organized, and fought for as against error.
Ludwig von Mises: Scholar, Creator, Hero, p. 21
The absolutist believes that man’s mind, employing reason (which according to some absolutists is divinely inspired, according to others is given by nature), is capable of discovering and knowing truth: including the truth about reality, and the truth about what is best for man and best for himself as an individual. The relativist denies this, denies that man’s reason is capable of knowing truth … libertarianism—and the wider creed of sound individualism of which libertarianism is a part—must rest on absolutism and deny relativism.
Rothbard vs. the Philosophers, p. 104
… science and truth, though long delayed and deferred, will eventually win out. In the long run, truth cannot be suppressed.
Irrepressible Rothbard, p. 386
TURGOT, ANNE ROBERT JACQUES
Turgot was unfortunately considered in the public eye as merely a fellow-traveller of physiocracy …
… since Turgot was unfortunately identified as a physiocrat, his reputation was dragged down …
Classical Economics, pp. 3–4
If we were to award a prize for “brilliancy” in the history of economic thought, it would surely go to Anne Robert Jacques Turgot. …
… he was a unique genius.
Economic Thought Before Adam Smith, p. 385
In the roster of A.R.J. Turgot’s outstanding contributions to economic theory, the most remarkable was his theory of capital and interest which, in contrast with such fields as utility, sprang up virtually full-blown without reference to preceding contributions. Not only that: Turgot worked out almost completely the Austrian theory of capital and interest a century before it was set forth in definitive form by Eugen von Böhm-Bawerk.
Economic Thought Before Adam Smith, p. 395
The acme of Turgot’s contribution to economic theory was his sophisticated analysis of interest.… Turgot also demonstrated—far ahead of his time—the relationship between this natural rate of interest and the interest on money loans.
Economic Thought Before Adam Smith, p. 397
In addition to developing the Austrian theory of time preference, Turgot was the first person, in his Reflections, to point to the corresponding concept of capitalization, that is, the present capital value of land or other capital good on the market tends to equal the sum of its expected annual future rents, or returns, discounted by the market rate of time-preference, or rate of interest.
Economic Thought Before Adam Smith, p. 400
Turgot’s influence on later economic thought was severely limited, probably largely because his writings were unfairly discredited among later generations by his association with physiocracy, and by the pervasive myth that Adam Smith had founded economics.
Economic Thought Before Adam Smith, p. 403
TYRANNY
While the ouster of one tyrannical ruling group might mean the virtual end of tyranny, it often means simply its replacement by another ruling group employing other forms of despotism.
Conceived in Liberty v. 1, p. 260; p. 250
… the tyranny of power is the source of vast human misery …
Conceived in Liberty v. 2, p. 194; p. 692
… the state has consisted of a minority plundering and tyrannizing over a majority.
Conceived in Liberty v. 3, p. 351; p. 1115
… it is both folly and tyranny to give any one man power over all …
Conceived in Liberty v. 4, p. 166; p. 1280
The history of government is the history of violence, of the strong plundering the weak. Wicked tyrants engage in orgies of violence …
Economic Thought Before Adam Smith, p. 25
… tyranny is not really congenial to the spirit of man, who requires freedom for his full development.
Education: Free and Compulsory, p. 11
Big Government, even elected government, has become a tyrant and oppressor of civil liberties, of the freedom to dissent from the powers that be.
Libertarian Forum v. 2, p. 704
The moral imperative of libertarian principle demands that tyranny, injustice, the absence of full liberty, and violation of rights continue no longer.
Libertarian Forum v. 2, p. 829
… all tyranny is majority tyranny, regardless of the formalities of the government structure.
Man, Economy, and State with Power and Market, p. 1066
