Model

Fiscal model · federal level · FY2026 dollars

New Charter Budget

Income, payroll and estate taxes are gone, and corporations pay one flat rate with no loopholes. A fee on electronic payments, a bank levy and the earnings of public finance pay for a lean federal government, a targeted safety floor, and the benefits already promised to today's retirees. Workers save into their own accounts. Move the levers and see whether it balances.

Year 1 balance after debt repayment

–

Revenue

–FY2026 actual: $5.40T

Spending

–FY2026 actual: $7.40T

Break-even fee

–rate that balances this year
Revenue
Charged on each electronic payment.
On the profit companies report to their own shareholders. Real costs like wages and materials come off; no other deductions, credits or carve-outs.
Today's rate is 21%, before loopholes.
On real gains between $250,000 and $1 million per person per year, during the early years below.
Today's top rate is 23.8%.
At most 20 years, ending sooner if growth brings the fee down to 3% or less. Then the rate drops to the long-run charge below. 0 skips the early rates.
On gains above the threshold below, on top of the fee, once the early years end.
Someone selling a house with an $80,000 gain pays nothing.
A flat charge on big banks' balance sheets, like Britain's. Bank profits run roughly $270B a year.
Profits kept from a nationalized mortgage system and payment rails.
$11.5T in 2025. Some shifts to cash.
$93T in 2025: paychecks, bills, business payments.
Of $1,148T in 2025. Charged the full fee: business deals, property, large purchases. Settlement of payments already charged, and moving your own money, are exempt.
The government's own payments are exempt from the fee. This is a stand-in, not a measurement: the model assumes those payments equal federal spending, since nearly all of it goes out electronically. Lower it if you think some federal spending never passes through these payment systems.
Overnight loans, repo, and securities settlement ($659T). An overnight loan earns about 0.011% a day, so even 0.01% wipes out most of that trade. Only a tenth is assumed to survive.
Public money
The constitution lets the money supply grow only as fast as real output. Each year's new money is spent into the economy by the Treasury instead of borrowed.
Under the charter, payment money is fully backed: CBDC accounts can't be lent out or lost in a bank run. Banks may still lend beyond their savers' funds under strict capital rules, and that lending creates the rest of the new money. 100% would be full-reserve banking, the Chicago Plan of 1933.
The Fed paid banks about $167B in 2025 to park money with it, and lost $21B doing so. Ending it returns the Fed to profit.
Public assets & the national fund
Share of all 277,000 federal buildings, including military base closures that come with the defense cut. They cost $10.3B a year to run. Proceeds go into the fund over ten years; the upkeep stops right away.
Added per year, from charging fair market rates on existing federal leases and minerals. Saved in the fund for future generations.
Average per year. Satellite companies need spectrum licenses too. Saved in the fund.
Norway's fund has averaged about 6% a year since 1998.
Share of the fund spent each year. Norway's rule is 3%.
A small stake in drugs and technologies built on federal research money.
Added per year from TVA and federal dams, mainly long-term contracts with data centers.
Market access fee
On imported consumer goods, vehicles and other finished goods. Replaces today's tariffs.
Watches, jewelry, luxury cars, fine wine, designer goods.
Immigration revenue
A ten-year residency visa, priced between a tourist visa and the EB-5 investor visa.
Thousands. Fewer people buy as the price rises, so treat this as your guess at demand.
On each new skilled-worker visa, about 85,000 a year. The 2025 H-1B fee is $100,000.
Refunded on departure. The government keeps the interest, and overstays forfeit the bond.
Personal accounts
Share of each paycheck saved into the worker's own account. It stays theirs and never touches the federal budget. 0% makes accounts voluntary.
The public fund earns more than the rate it promises savers and keeps the difference. This is your "small tax on the interest."
Social Security for the wealthy
Net worth not counting the primary home, with a five-year look-back and a short phase-out band above the line. Applies to today's retirees during the transition.
Safety floor
Set at the federal poverty line ($15,960 for one person in 2026) and adjusted every year. For people with disabilities, and for retirees whose accounts fall short.
Posted prices, drug prices capped at what other rich countries pay, fewer middlemen, more doctors and competition, health courts for malpractice. Applies to Medicare and Medicaid.
Nursing homes, disabled people and the poor.
Paid with every paycheck, larger for families with children. Replaces the Earned Income Tax Credit (about $60B) and the refundable part of the child credit (roughly $35B), which end with the income tax.
Government
Navy-first, fewer overseas bases, nukes maintained.
Promises already made. Left whole by default.
Duplication, sunset laws, a short federal list.
Savings on what the government buys and builds: two-year permit deadlines, fixed-price contracts, a short contracting rulebook, international price checks, every purchase posted online. Same services, lower price.
GAO puts federal fraud losses at $233B to $521B a year.
State transition fund
States lose the property tax on homes and family farms, and half of today's federal Medicaid money. The fund cushions both while they rebuild their own taxes.
The help shrinks a little each year and ends after this many years.
National service
Pay, housing, food and training. Civilian service programs run roughly $25,000 to $35,000 a year per member.
Tuition, trade school, or a deposit into their personal account.
Debt
The fee is set high enough to retire this much of the $32.4T in Treasury bonds every year. Interest falls as the debt does.
Transition
Today's retirees keep their Social Security and Medicare. That cost fades as the system matures, and the account fund grows.

Operating balance over the transition

SurplusDeficitOutlined bar: the year you're looking at

Line by line, year 1

$ billionsFY2026 actualCharterChange

What the median worker keeps

A full-time worker at the U.S. median wage, single, standard deduction. The fee is charged on many payments, a paycheck, a purchase, a supplier's invoice, and every business passes its fees on. So instead of counting hits, this counts the total: every dollar of fee and market access charge collected lands on consumers, shared by how much each person spends. That's the toughest assumption for the charter, since in reality some lands on investors, foreign buyers and governments.

What the median worker saves on everyday costs

Taxes are only half of it. The charter also lowers what things cost. Same worker, per year.

CostSaved per year

Growth we didn't count

We expect the economy to grow faster than it ever has once income, payroll, corporate and estate taxes are gone. Saving and investing would no longer be taxed, and every business would drop the cost of tax compliance. We can't measure that in advance, so none of it is in the numbers above.

Economists who have modeled similar changes found a wide range. Replacing the income tax with a consumption tax raised long-run output about 11% in one well-known study (Altig, Auerbach, Kotlikoff and colleagues). A simulation of the FairTax found about 10.6% in a closed economy and close to nothing once capital could flow abroad (Jokisch and Kotlikoff).

Two paths through the transition

Today's retirees keep their benefits while everyone else builds an account, so the early years cost more than the finished system. The charter doesn't pick how to carry that hump. Citizens choose by national referendum before the transition begins.

Path A

Pay as we go

The fee is set each year to balance that year's budget, and steps down as legacy benefits wind down.

WhenFee
  • No new debt. The national debt starts falling as soon as surpluses appear.
  • The current generation of workers carries the full cost of the transition.
  • The early fee is high, so prices are higher for the first decade.
  • A schedule published in advance lets families and businesses plan for each step down.

Path B

Bridge bonds

One flat fee from the first day. The early gap is borrowed with dedicated transition bonds, then repaid from later surpluses. Chile used this approach in 1981.

Flat fee, every year
Most borrowed at once
Peak reached in
Interest paid on bridge bonds
Bonds fully repaid by
  • A lower, steady fee from the start, which makes the change easier to accept.
  • The cost is spread across generations, including the young workers who gain the most.
  • Adds debt for decades, the thing the charter is meant to end, and pays interest on it.
  • Depends on later leaders keeping the fee in place to repay. The bonds would need constitutional protection.
  • Needs voters to approve it as the one exception to the charter's ban on new debt.

Bridge bonds are set to be fully repaid within 40 years at the interest rate in the assumptions below.

Debt rules

The country pays extra on its mortgage. These rules are written into the charter, not left to whoever governs.

RuleHow it works
No net new borrowingTotal debt may not rise. Paying off a maturing bond with a new one is allowed during the transition; adding to the total is not.
Principal and interest, every yearThe fee is set to pay interest and retire a fixed amount of debt. As maturing bonds are paid off with surplus cash instead of new borrowing, the balance and the interest both shrink.
Buy back cheap bondsBonds issued near 1% in 2020 and 2021 now trade far below face value. Surpluses buy them back at market price, so a dollar of debt can be retired for much less than a dollar. Voluntary for every seller.
One emergency exceptionA declared war or national emergency, approved by a supermajority of the council and confirmed by a citizen jury. The repayment schedule is set the day the debt is approved, and the authority expires on its own.
The national fund is the rainy-day fundFee revenue falls in a recession because spending falls. The fund covers the gap instead of borrowing.

The Social Security trust fund. About $2.56 trillion of the national debt is money the government owes the Social Security trust funds, which is money it owes itself. Under the charter, legacy benefits are paid directly from the budget, so those bonds are retired at the transition and no retiree loses a dollar. That debt isn't in the $32.4 trillion this model pays down.

What current law already plans. The trustees project the retirement trust fund runs dry late in 2032. After that, only 78% of scheduled benefits can be paid, an automatic cut of about a fifth. The charter keeps today's retirees whole.

It has been done. Switzerland's voters approved a constitutional debt brake by about 85% in 2001. Spending is capped to what revenue would be in a normal year, so good years cover bad ones. Swiss debt fell from about 55% of the economy in 2003 to about 35%.

Why the growth dividend isn't printing money

Inflation happens when money grows faster than the goods and services it can buy. The charter ties the two together: the money supply may grow only as fast as real output, measured after the fact. More goods, matching money, same prices.

Today that new money already gets created every year. Private banks create most of it when they lend, and they collect the interest. The charter moves part of that privilege to the public, a step toward what Irving Fisher and the Chicago economists proposed in 1933.

It stops short of full-reserve banking on purpose. Everyday money is fully backed, so bank runs end. Banks keep a limited power to lend beyond their savers' funds, so business credit doesn't dry up and rates don't jump. Switzerland voted down the full version in 2018 over exactly that fear.

SafeguardWhat it prevents
The growth rule is in the constitution, not in law or policyNo monarch or council can turn up the presses in a crisis or an election year
Growth is measured on real output, a year in arrears, by an independent statistics officeIssuing money against forecasts that never arrive
No growth, no new money; a shrinking economy shrinks the issue to zeroPaying for a recession with inflation
Automatic stop if inflation tops a set ceiling for two straight yearsA rule that drifts out of step with prices going unchecked
The amount issued each year is published to the dollarQuiet expansion out of public view

Assumptions you can change

These are rough round numbers, not sourced figures. Adjust them if you have better ones.

Sources

  1. CBO, Monthly Budget Review: September 2026: FY2026 receipts and outlays by category.
  2. Federal Reserve, Fedwire Funds Service annual statistics: $1,148T in 2025.
  3. Federal Reserve, Fedwire Securities Service annual statistics: $659T in 2025.
  4. Nacha, ACH Network 2025 results: $93T in 2025.
  5. Nilson Report, Global Brand Cards in the US 2025: $11.46T card purchase volume.
  6. PrimeRates, M2 money supply at record high and BCA Sekuritas: M2 of $23.34T in August 2026.
  7. First Trust, The Fed's 2025 financials: about $167B paid on reserves, $21B net loss in 2025.
  8. GAO-25-108159, federal real property: 277,000 buildings, $10.3B a year in upkeep, $370B maintenance backlog.
  9. BLS, Usual Weekly Earnings, Q2 2026: median full-time pay of $1,258 a week.
  10. BEA via FRED, Personal Consumption Expenditures: $20.87T in 2025.
  11. BEA, Personal Income and Outlays, July 2025: wages and salaries of $13.0T a year.
  12. NSGA citing CMSPI, card swipe fees: $236B in 2024.
  13. KFF 2025 Employer Health Benefits Survey: $9,325 average single premium.
  14. CMS National Health Expenditure fact sheet: $556.6B out of pocket in 2024.
  15. Tax Foundation, IRS tax complexity costs: 8 hours per return for wage earners, $47.55 an hour.
  16. ATTOM 2025 property tax report: $4,427 average on a single-family home.
  17. GAO, Government-wide contracting FY2024: $755B in contracts, $445B of it defense.
  18. HHS 2026 poverty guidelines: $15,960 for one person.
  19. Peter G. Peterson Foundation, refundable tax credits: the EITC cost about $60B in 2022.
  20. BEA via FRED, Corporate business profits before tax: $4.57T a year, Q2 2026.
  21. Tax Foundation, Share of corporate income by company size: the largest firms earn about 77% of taxable corporate income.
  22. Social Security Administration, 2026 Trustees Report release: retirement fund depleted late 2032, 78% of benefits payable; reserves $2.56T.
  23. Avenir Suisse, Another Swiss export: the debt brake: approved by about 85% in 2001; debt fell from about 55% to 35% of GDP.
  24. Joint Economic Committee, Monthly Debt Update: $32.43T held by the public, 3.52% average rate.
  25. Altig, Auerbach, Kotlikoff, Smetters and Walliser, Simulating U.S. Tax Reform (NBER): about 11% long-run output gain from a proportional consumption tax.
  26. Jokisch and Kotlikoff, Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax (NBER): about 10.6% in a closed economy.
  27. Census Bureau, U.S. imports of goods by end-use category: $3.41T in 2025, including $1.83T of industrial supplies and capital goods.
  28. GAO, Improper Payments and Fraud testimony (2025): $233B–$521B annual fraud losses.
Model version: October 13, 2026. This is the version documented in Appendix A of A National Defrag. A preliminary policy model, not a certified forecast. Interest assumes the paydown target is met each year, at today's average rate on the debt. The chart shows the balance at the fee you set; a surplus there is what pays down the debt. The fee is applied once per payment; business-to-business fees get passed along in prices, which this model doesn't track. The account fund is built from contributions growing at the promised rate; the government's spread is earned on that balance.