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

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.

4 points | by SDedu 2 hours ago

4 comments

  • SHOwnsYou 7 minutes 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?

  • aborsy 36 minutes 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.
  • ksherlock 33 minutes 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 13 minutes 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!
  • dangus 2 hours 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 2 hours 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.
      • kasey_junk 1 hour ago
        Why did you pick 1 to 9 lending ratio? That is _dramatically_ higher ratio than current private bank lending ratios and I know of _no_ research that would suggest that’s a good fractional reserve number.
        • SDedu 1 hour ago
          Thanks for your comment Kasey! I completely understand your concern and I welcome your comments into this plan! If the Federal Reserve which is government put in place this ratio. The private sector guarantees the 600 dollars into Fed to absorb the 100 trillion dollars that is needed in the future! Please let me know if this helps!
          • kasey_junk 3 minutes ago
            Private sector investors will not invest with banks that have lending ratios that high. 0.8 is the _absolute_ top before they start getting nervous.
      • dangus 2 hours 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 1 hour 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 1 hour 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%.

            • SDedu 1 hour ago
              Dangus, the plan helps workers by removing the taxes from being pulled from their check because Federal taxes are like 50 percent and I’m a worker at work typing this while juggling boxes so I that’s why I came here but take this example if a person or company just made 1 billion dollars and if flipped means 9 billion which means 4.5 billion of that goes to fix the economy while rewarding workers to own houses, build families, and investing so money works for them and not getting the other end of the stick if you know what I mean!
            • SDedu 1 hour ago
              Thanks for your passion! I will be releasing the full plan soon but I just wanted to know what everyone think but I understand if you don’t see metrics then you don’t know how to respond! So I understand the wtf thinking to is this post!