I’m not sure we can get away from labels. Our minds always create this kind of shorthand for boxing folks up and identifying them. I think the real problem is we adhere too much to labels, even when we are told it’s hurting people. I don’t necessarily mind labels, but I would like people to be more mindful of the outcome of labeling someone.
I like your ideal where each person can label themselves as they see fit, and be accepted for it.