4 ms·

Ask HN: Can a Capital-Flipping Tax System Pay Off the U.S. Debt

4 points by SDedu 11mo ago

After more than a year of iteration, I’ve released an updated version of the PAS Tax Plan, a post-partisan proposal designed to replace the current tax system with a capital-based funding model. The goal is to make the U.S. fiscally solvent without austerity, new taxes, or inflation, while creating a national framework that rewards productivity, innovation, and savings. Core Mechanism • Weekly payroll contributions (e.g., $600) are flipped by the Federal Reserve through reserve banking principles → $5,400 in new capital. • Half is returned to the worker, the other half split between the National Budget and Social Security Trust Funds. • Every participant receives a 10% annual capital return, aligning personal income with national capital growth. • Traditional taxes (income, corporate, payroll, capital gains, etc.) are eliminated. Debt & Sovereign Model • The Top 250 wealthiest Americans contribute capital infusions and sovereign equity allocations to retire the federal public debt. • The Bottom 250 U.S. counties receive capital-flipping authority through a Sovereign Wealth Fund (SWF) to resolve student loans, consumer debt, and state liabilities. • Replaces leveraged buyouts with equity-based value creation — capital and ownership stay domestic. Outcomes • U.S. transitions from borrowing to self-financing. • Public debt paid down through internal capitalization. • Citizens and enterprises receive direct capital returns instead of tax refunds. • Incentives are aligned: those who create value share in national upside. I will post the full plan after careful consideration and critique from the HN community! ⸻ Questions for HN 1. What are the macro-economic or technical flaws you see in flipping payroll capital this way? 2. Could a Fed-IRS dual system manage this at scale using digital rails or tokenized reserves? 3. Would equity-based debt retirement (Top 250 / Bottom 250) be politically and legally feasible? 4. How might we pilot this through an existing SWF or state-level trial? Appreciate any thoughtful critique — especially from economists, engineers, and policy thinkers interested in systemic reform.

dangus 11mo ago
What do you mean by flipping? Can you explain this better in a way that makes sense? If I understand this right (and I might not) it sounds like you’re just making this into a flat tax that is wildly regressive. It sounds like your system essentially has 0 taxes for the trust fund kids who have no income and live on asset appreciation and trading. No payroll, no tax. I think it should be pointed out that there’s nothing wrong with the current system in terms of being able to pay down debt to a more reasonable level, it has been the conscious choice of the donor class to continue to cut taxes to the wealthy (tax cut and jobs act, big beautiful bill). Without those cuts the US system would easily produce a surplus. Instead, we have a system that transfers wealth from the federal government to oligarchs.
- SDedu 11mo ago
  Thank you for your comment! Flipping means that the money is deposited into the IRS who sends it to the Federal Reserve who takes the 600 dollars and times it by 9 ($5400 dollars) because the Fractional Reserve System keeps 1 and lends out the amount by 9 times.
  - dangus 11mo ago
    Thanks for clarifying. I think this means I was correct in reading this as a flat tax of payroll. Do you think you can address how this can be made to be fair to the working class? It sounds like this means that trust fund kids and landlords never pay any tax, and are highly incentivized to hire as few people as possible. (I guess you can say that payroll taxes have the same effect but corporate, property, and capital gains taxes do not). For example, with no property, corporate, or capital gains taxes in place, this appears to heavily incentivize hoarding of rental properties by those with the means to do so. As an upper middle class person myself, if this tax system came into place I would immediately liquidate my life savings and buy as many rental properties as I could afford and then quit my job. I’m pretty sure that I would make a better income than I do now doing productive work as my tax rate would drop from like 40% to 0%.
    - SDedu 11mo ago
      You have it right! It’s a capital based model where income is the main driver of the economy where everyone puts in and the IRS/Fed monitors the economic activity of the country while allowing you to keep more of your money.
      - dangus 11mo ago
        You did not answer my question about fairness to workers, and in that lack of answer I have my answer: you are anti-worker and prefer a system that rewards people who are already wealthy even more than they are rewarded now. When you see someone like Jeff Bezos paying an effective tax rate of 12% you want that rate to be zero, while the median worker is getting a tax hike paying 50% ($600 per week is about half the median weekly individual income). You’ve also made the tax so flat that it disregards regional economic differences. If you live in Alabama you’re paying a wildly higher tax rate than if you live in California. (You gave the example of $600 rather than a percent, please correct if you meant something else) You call it an income-driven economy but only the income of the people doing labor is taxed. If anything you’re doubling down on the most flawed aspects of our current system, introducing insane new ones, and possibly the most annoying bit is you seem to have zero interest in making even the most half-hearted elevator pitch as to how this could possibly make life better for the 99%.
aborsy 11mo ago
The US debt is the result of USD being the global currency reserve. As long as that status is maintained, there will be debt.
- SDedu 11mo ago
  Aborsy, what if I tell you that the US went through a quiet bankruptcy in the 1970’s where the U.S. had to move from the gold standard to keep the system going and to sell off industries, critical infrastructure, roads, bridges, and many others things to stay afloat! We need a plan to help buy back those assets and bring back re industrialization to the U.S. from higher end manufacturing!
ksherlock 11mo ago
I don't understand your core mechanism. As you've described it, joe taxpayer pays, say, $600 in taxes to the IRS. The IRS gives that money to the federal reserve. The federal reserve runs their money printer and gives $2,700 back to joe taxpayer and $2,700 to the treasury. That's just inflation with extra steps. It would be interesting to see people clamoring to pay -more- taxes though.
- SDedu 11mo ago
  Ksherlock, thank you for your response but it’s not a tax! The 600 dollars is paid out from the employer then goes to the IRS/Fed who verify then the money (ADP) is used from a 1 - 9 (600 to 5400 which is split to 2700 dollars) which I know it not in Basel III or JPmorganChase or Citigroup but it’s the federal government! Then 50% of federal taxes for the worker will not be needed to be deducted but the Fed will just move the money over at the top! More money for everyone!
  - ksherlock 11mo ago
    What you call "more money" is better described as "runaway inflation."
    - SDedu 11mo ago
      I’ll go back in the lab and study a little more! Thanks for the feedback.
SHOwnsYou 11mo ago
Hello! Novelty is incredible. While economics is basically voodoo, it appears you've stumbled onto a fast track to derailing the country. The federal reserve flipping $600 capital into $5400 of capital also creates $5400 of debt. Possibly more over time as interest weighs of the $5400. The way banks "flip" assets into higher amounts via fractional banking is by loaning it out. It doesn't just become 9x'd on their books magically. Someone has to take on the debt. I'm not seeing how this is self-financing anything; it looks more like refinancing while causing gigantic inflation of the money supply by 9x. A $1 today is worth $0.10 after this. This is circular investment with leverage, backed by an increasingly unstable government. Can you explain more on this actually works in practice? Where is any upside? Current debt goes away, but is replaced by 9x as much debt held by the federal reserve or swf?
- SDedu 11mo ago
  Thanks for your comment! I came from a model using millions various levels of income (or flipping) in a capital pool which is invested revenue generating assets like roads, bridges, AI build out which intern will off set the debt. The 9x is just a sample but I’m open to any suggestions!
  - SHOwnsYou 11mo ago
    This is a redistribution scheme. It is a transfer of wealth to those who can take the risk to contract for the creation of the wealth generating assets. For example, a regular joe isn't going to start a construction company and win road creation contracts. The contracts would go to existing construction companies with proven histories of creating roads. This is playing musical chairs with money while at the same time using leverage to do it. The poor get way poorer because what few dollars they do have will be worth less. The rich get way richer because there are more dollars to go into their coffers. The poor don't get many new dollars in their coffers because they have no extra money to play musical chairs with, so they never join the capital pool in proportion nor do they receive its investment dollars.
    - SDedu 11mo ago
Blackstrat 11mo ago
No, I don't believe this will work. It's essentially a pyramid scheme. The Fed's fractional accounting system doesn't create new money. It increases the members lending power, i.e., more debt. The St. Louis Fed used to publish a good book on exactly how the Fed works. Might be worth a look.
- SDedu 11mo ago
  Blackstrat, Thanks, I’ll take a look and thanks for your comment.

4 points by SDedu 11mo ago

dangus 11mo ago

What do you mean by flipping? Can you explain this better in a way that makes sense? If I understand this right (and I might not) it sounds like you’re just making this into a flat tax that is wildly regressive. It sounds like your system essentially has 0 taxes for the trust fund kids who have no income and live on asset appreciation and trading. No payroll, no tax. I think it should be pointed out that there’s nothing wrong with the current system in terms of being able to pay down debt to a more reasonable level, it has been the conscious choice of the donor class to continue to cut taxes to the wealthy (tax cut and jobs act, big beautiful bill). Without those cuts the US system would easily produce a surplus. Instead, we have a system that transfers wealth from the federal government to oligarchs.

SDedu 11mo ago
Thank you for your comment! Flipping means that the money is deposited into the IRS who sends it to the Federal Reserve who takes the 600 dollars and times it by 9 ($5400 dollars) because the Fractional Reserve System keeps 1 and lends out the amount by 9 times.
- dangus 11mo ago
  Thanks for clarifying. I think this means I was correct in reading this as a flat tax of payroll. Do you think you can address how this can be made to be fair to the working class? It sounds like this means that trust fund kids and landlords never pay any tax, and are highly incentivized to hire as few people as possible. (I guess you can say that payroll taxes have the same effect but corporate, property, and capital gains taxes do not). For example, with no property, corporate, or capital gains taxes in place, this appears to heavily incentivize hoarding of rental properties by those with the means to do so. As an upper middle class person myself, if this tax system came into place I would immediately liquidate my life savings and buy as many rental properties as I could afford and then quit my job. I’m pretty sure that I would make a better income than I do now doing productive work as my tax rate would drop from like 40% to 0%.
  - SDedu 11mo ago
    You have it right! It’s a capital based model where income is the main driver of the economy where everyone puts in and the IRS/Fed monitors the economic activity of the country while allowing you to keep more of your money.
    - dangus 11mo ago
      You did not answer my question about fairness to workers, and in that lack of answer I have my answer: you are anti-worker and prefer a system that rewards people who are already wealthy even more than they are rewarded now. When you see someone like Jeff Bezos paying an effective tax rate of 12% you want that rate to be zero, while the median worker is getting a tax hike paying 50% ($600 per week is about half the median weekly individual income). You’ve also made the tax so flat that it disregards regional economic differences. If you live in Alabama you’re paying a wildly higher tax rate than if you live in California. (You gave the example of $600 rather than a percent, please correct if you meant something else) You call it an income-driven economy but only the income of the people doing labor is taxed. If anything you’re doubling down on the most flawed aspects of our current system, introducing insane new ones, and possibly the most annoying bit is you seem to have zero interest in making even the most half-hearted elevator pitch as to how this could possibly make life better for the 99%.

aborsy 11mo ago

The US debt is the result of USD being the global currency reserve. As long as that status is maintained, there will be debt.

SDedu 11mo ago
Aborsy, what if I tell you that the US went through a quiet bankruptcy in the 1970’s where the U.S. had to move from the gold standard to keep the system going and to sell off industries, critical infrastructure, roads, bridges, and many others things to stay afloat! We need a plan to help buy back those assets and bring back re industrialization to the U.S. from higher end manufacturing!

ksherlock 11mo ago

I don't understand your core mechanism. As you've described it, joe taxpayer pays, say, $600 in taxes to the IRS. The IRS gives that money to the federal reserve. The federal reserve runs their money printer and gives $2,700 back to joe taxpayer and $2,700 to the treasury. That's just inflation with extra steps. It would be interesting to see people clamoring to pay -more- taxes though.

SDedu 11mo ago
Ksherlock, thank you for your response but it’s not a tax! The 600 dollars is paid out from the employer then goes to the IRS/Fed who verify then the money (ADP) is used from a 1 - 9 (600 to 5400 which is split to 2700 dollars) which I know it not in Basel III or JPmorganChase or Citigroup but it’s the federal government! Then 50% of federal taxes for the worker will not be needed to be deducted but the Fed will just move the money over at the top! More money for everyone!
- ksherlock 11mo ago
  What you call "more money" is better described as "runaway inflation."
  - SDedu 11mo ago
    I’ll go back in the lab and study a little more! Thanks for the feedback.

SHOwnsYou 11mo ago

Hello! Novelty is incredible. While economics is basically voodoo, it appears you've stumbled onto a fast track to derailing the country. The federal reserve flipping $600 capital into $5400 of capital also creates $5400 of debt. Possibly more over time as interest weighs of the $5400. The way banks "flip" assets into higher amounts via fractional banking is by loaning it out. It doesn't just become 9x'd on their books magically. Someone has to take on the debt. I'm not seeing how this is self-financing anything; it looks more like refinancing while causing gigantic inflation of the money supply by 9x. A $1 today is worth $0.10 after this. This is circular investment with leverage, backed by an increasingly unstable government. Can you explain more on this actually works in practice? Where is any upside? Current debt goes away, but is replaced by 9x as much debt held by the federal reserve or swf?

SDedu 11mo ago
Thanks for your comment! I came from a model using millions various levels of income (or flipping) in a capital pool which is invested revenue generating assets like roads, bridges, AI build out which intern will off set the debt. The 9x is just a sample but I’m open to any suggestions!
- SHOwnsYou 11mo ago
  This is a redistribution scheme. It is a transfer of wealth to those who can take the risk to contract for the creation of the wealth generating assets. For example, a regular joe isn't going to start a construction company and win road creation contracts. The contracts would go to existing construction companies with proven histories of creating roads. This is playing musical chairs with money while at the same time using leverage to do it. The poor get way poorer because what few dollars they do have will be worth less. The rich get way richer because there are more dollars to go into their coffers. The poor don't get many new dollars in their coffers because they have no extra money to play musical chairs with, so they never join the capital pool in proportion nor do they receive its investment dollars.
  - SDedu 11mo ago

Blackstrat 11mo ago

No, I don't believe this will work. It's essentially a pyramid scheme. The Fed's fractional accounting system doesn't create new money. It increases the members lending power, i.e., more debt. The St. Louis Fed used to publish a good book on exactly how the Fed works. Might be worth a look.

SDedu 11mo ago
Blackstrat, Thanks, I’ll take a look and thanks for your comment.