Murray N. Rothbard, The Uneasy Case for Degressive Taxation: A Critique of Blum and Kalven (2001)

Murray N. Rothbard’s journal article is a sustained critique of Walter J. Blum and Harry J. Kalven, Jr.’s The Uneasy Case for Progressive Taxation. Published in 2001, it is identified by the editor as a manuscript written in 1952 for the Volker Fund. Rothbard follows the sequence of the essay under review: objections to progression, arguments supporting it, equality of opportunity and inheritance, and finally the proposed alternative of “degressive” taxation. His central contention is that Blum and Kalven’s strongest arguments undermine progressive taxation without establishing their preferred system—a proportional income tax above a subsistence exemption. Economic analysis and individualist political philosophy jointly supply his standards of judgment.

Rothbard begins by challenging the assumptions that restrict the discussion to income taxation, dismiss regressive alternatives, and treat a minimum exemption as self-evidently desirable. Degression remains progressive because the exemption makes the effective tax rate rise with income. It therefore retains, in milder form, the discrimination Rothbard objects to in graduated taxation. Family allowances likewise require taxpayers with fewer dependents to subsidize those with more. These objections rest on his conviction that need does not establish an entitlement to another person’s income, rather than merely on concern about administrative efficiency.

The first major section attacks Blum and Kalven’s treatment of constitutional limitations, majority rule, and capital formation. Rothbard endorses uniformity and due-process objections to progressive taxation and argues that the Sixteenth Amendment did not settle them. Against reliance on democratic discretion, he prefers prior constitutional restrictions protecting individuals from confiscation by electoral majorities. He also rejects the suggestion that the effects of progression on work and saving are merely psychological conjectures. In his account, taxation discourages accumulation and entrepreneurial risk, threatening the capital structure on which living standards depend. These are forceful theoretical and political claims; the article does not supply an independent empirical estimate of their magnitude.

His positive alternative emerges in the discussion of tax justice. He distinguishes payment according to benefits received from payment according to the cost of providing services. Benefits are subjective and cannot be measured reliably; costs offer a closer approximation to market pricing. Where services have identifiable users, he favors charges paid by those users, while also questioning whether government should provide the services at all.

Since there is no free market for protection service, a tax levied on the basis of cost is the best approximation to the free-market ideal of one good, one price.

This analogy drives Rothbard’s rejection of proportional taxation as “neutral” toward the market. Market neutrality does not mean preserving everyone’s percentage share of income after taxation; it means approximating equal prices for equal services. A rich customer does not ordinarily pay more for the same commodity. Rothbard therefore proposes equal personal charges for protection, supplemented by fines on wrongdoers and approximately acreage-based charges for policing real property. His case for equal taxation is conditional on the service supplied, not simply an endorsement of identical payments irrespective of governmental activity.

Rothbard finds Blum and Kalven most valuable when they dismantle sacrifice theories. He praises their recognition that utility is ordinal and cannot be measured or compared between persons. This defeats attempts to derive progressive rates from equal sacrifice, proportionate sacrifice, or minimum aggregate social sacrifice. He goes further by questioning the ethical premise of distributing compulsory injury fairly:

Instead of worrying about what constitutes “equal hurt,” why inflict any hurt at all?

The question exposes a tension running through his argument: he develops a cost-based standard for financing protection while refusing to assume that a theory of equitable sacrifice can justify taxation itself. He similarly treats “ability to pay” as an inadequate moral principle. Possession of resources, in his view, does not authorize their seizure.

The critique becomes more appreciative when Blum and Kalven examine egalitarian arguments. Rothbard endorses their objections to measurable “general welfare,” redistribution benefiting one group at another’s expense, and claims that monetary inequality necessarily undermines democracy or fellowship. He grounds peaceful cooperation in market exchange and rejects income leveling as hostile to individual differences. Monetary rewards need not evaluate the “whole man”: nonmonetary qualities can receive nonmonetary recognition without state revision of market incomes.

Their treatment of inheritance, however, renews his opposition. Rothbard rejects the sporting analogy through which equal opportunity requires identical starting positions:

Life is not a race, but an attempt by each individual to be as happy as possible.

Ownership includes the right to save and provide for children. Equalizing childhood environments would extend beyond inheritance to parental expenditure, education, and upbringing, ultimately threatening the private family. He also regards inheritance taxation as especially destructive because it taxes accumulated capital and weakens the motive for long-term saving. Unlike inherited political status, inherited market wealth must continually be maintained through successful investment.

The concluding discussion returns to degression’s unstable foundation. Blum and Kalven’s preferred exemption must coincide with minimum subsistence to avoid the problems they associate with higher or lower thresholds.

Yet, it is impossible to set such a level scientifically; any such exemption level would be arbitrary and subject to the further capriciousness of the authors' "democratic process."

Rothbard thus turns their critique against their recommendation. The article’s significance lies in joining the Austrian objection to interpersonal utility measurement with a libertarian challenge to redistributive authority. Its strongest conceptual move is to shift tax justice from percentages of income and quantities of sacrifice toward equal treatment, service costs, and limits on state power. Its recurring verdict is that Blum and Kalven illuminate the weaknesses of progression but fail to justify the residual progression embedded in degression.