Fifteen Percent
A corporate tax cut that balances the federal budget in eight years, makes the wealthiest universities free, and pays for the retraining. Four provisions, every number derived. Post 4 of 4 in the wage-displacement series.
Four provisions. First, replace the corporate income tax with a destination-based cash-flow tax at 15 percent. Investment is expensed immediately, so the normal return to capital is untaxed and the base reduces to economic rents. The tax follows the domestic sale, so transfer pricing, intangible migration and debt-loading stop working. The statutory rate falls from 21 percent to 15 percent while revenue rises — a rate cut that raises money because the base broadens and stops leaking.
Second, cap real outlay growth at real GDP growth minus 2.5 percentage points until balance is achieved. This spending rule does most of the work. At 3.5 percent real growth with real outlays flat, the rate that balances in eight years is under two percent. At two percent growth with two percent outlay growth, no survivable rate closes it. The deadline is not arbitrary — fiscal 2034 is when the Social Security trust fund is projected to reach zero.
Third, any private college or university whose student-adjusted endowment exceeds $500,000 per student must reduce net tuition by one percent of student-adjusted endowment per student per year, or expand enrollment until it falls below the threshold. At the wealthiest institutions the required reduction exceeds tuition itself — the formula makes them free automatically. Three fixes are required or it leaks: close the 3,000-student minimum and religious-institution carveout, escalate enforcement through excise before revoking exempt status, and meet the mandate from unrestricted draw.
Fourth, why this can be positive-sum. Corporations get a lower rate. Workers get a lower payroll wedge. Students get cheaper tuition and, at the top, free. Retirees get a trust fund that does not empty in 2034. All of it is impossible in a stagnant economy and simultaneously available in a fast-growing one. Do not tax the robot. Tax the surplus the robot creates, collect it where the sale happens, hold spending growth below the growth rate, and spend the difference making human labor cheap to hire again.
Fifteen Percent
A corporate tax cut that balances the federal budget in eight years, makes the richest universities free, and pays for the retraining. Here is the bill.
The three preceding dispatches established the problem: labor's share of national income is at a record low, the revenue system is indexed to wages, the deficit needs a third more revenue to close, and taxing automation to slow it down destroys the growth that makes closure possible.
This is the design that follows from those constraints. Four provisions. Every number is derived and shown.
One — the rate is fifteen percent, and it is a cut
Replace the corporate income tax with a destination-based cash-flow tax at fifteen percent.
Cash-flow means the base is receipts less all costs, with capital investment deducted in full in the year it is incurred. Because investment is expensed immediately, the normal return to capital is untaxed and the base reduces to economic rents. A firm that plows earnings into capacity owes very little. A firm harvesting margin owes more.
Destination-based means the tax applies to domestic sales less domestic expenses — imports taxed, exports exempt. Transfer pricing, intangible migration and debt-loading stop working, because the liability follows the sale rather than the reported profit.
Note what the headline says: the statutory rate falls from 21 percent to 15 percent while revenue rises, because the base broadens and stops leaking. This is a rate cut that raises money. That is not a trick; it is what happens when you stop taxing a base that has learned to leave.
Use part of the proceeds to cut the payroll wedge, and earmark a share to Social Security and Medicare so the benefit link survives. The earmark is not decoration — it is what makes the social insurance system's numerator independent of the wage share.
Two — the spending rule does most of the work
Cap real outlay growth at real GDP growth minus 2.5 percentage points, until balance is achieved.
Here is why the rule matters more than the rate. Solving for the rate required to balance in eight years, at three assumed sizes for the cash-flow base (10, 12, and 14 percent of GDP):
2.0% growth, 0% real outlay growth — rate needed 23.9% / 19.9% / 17.0%.
2.0% growth, 2% real outlay growth — 58.0% / 48.3% / 41.4%.
3.5% growth, 0% real outlay growth — 1.9% / 1.6% / 1.4%.
3.5% growth, 1% real outlay growth — 16.6% / 13.8% / 11.9%.
5.0% growth, 1% real outlay growth — 0% / 0% / 0% — balances on the spending rule alone.
5.0% growth, 2% real outlay growth — 9.8% / 8.1% / 7.0%.
At 3.5 percent real growth with outlays held flat in real terms, you balance at a rate under two percent. At two percent growth with outlays rising two percent, no survivable rate closes it. Fifteen percent is the number that balances the central case — 3.5 percent growth, outlays up one percent real — with margin.
The deadline is not arbitrary. Eight years from fiscal 2026 is fiscal 2034, the year Social Security's trust fund reserves are projected to reach zero. [1]
Three — the endowment provision, honestly scored
Any private college or university whose student-adjusted endowment exceeds $500,000 per student must either reduce net tuition by one percent of student-adjusted endowment per student, per year, or expand enrollment until it falls below the threshold, with credited enrollment growth capped at five percent annually.
The threshold is not invented. It is the one Congress already wrote into law effective for tax years beginning after December 31, 2025, when the flat 1.4 percent excise on net investment income was replaced with tiers based on endowment per student. [2] [3] Borrowing it means the definitions and the accounting rules already exist.
Stating the tuition requirement in dollars rather than as a percentage cut is deliberate. A percentage invites sticker-price inflation. A dollar figure does not.
$500,000 per student — 5% spendable $25,000; required tuition cut $5,000; enrollment-growth alternative 0%.
$750,000 per student — $37,500; $7,500; 50%.
$1,250,000 per student — $62,500; $12,500; 150%.
$2,000,000 per student — $100,000; $20,000; 300%.
$3,646,093 per student — $182,305; $36,461; 629%.
Two observations. At the wealthiest institutions the required reduction exceeds tuition itself — the formula makes them free automatically, with no separate provision. And above roughly $750,000 per student the enrollment route is arithmetically unavailable, so the choice is real only near the threshold. Design it knowing that.
Three fixes are required or it leaks. The current excise reaches only institutions with more than 3,000 tuition-paying students and exempts qualified religious institutions; [4] both exclusions must be closed for a tuition mandate or the wealthiest small colleges escape and everyone else reorganizes. Enforcement should escalate through excise before reaching loss of exempt status, which a court may find disproportionate. And donor-restricted funds cannot simply be redirected by statute; the mandate has to be met from unrestricted draw.
And now the honest part. Total US higher-education endowments stood at $944.3 billion across 657 institutions in fiscal 2025, returning an average 10.9 percent — roughly $103 billion of annual investment income. [5] [6] Taxed at the enacted top rate of eight percent that is about $8.2 billion, or 1.1 percent of the deficit.
The endowment provision is not revenue. It is transition finance and legitimacy — tuition relief and retraining capacity delivered by the institutions best able to provide it, and the answer to any corporation asked to pay a rent levy while the wealthiest nonprofits pay nothing. Keep it. Do not score it.
Four — why this can be positive-sum
Corporations get a lower rate. Workers get a lower payroll wedge. Students get cheaper tuition and, at the top, free. Retirees get a trust fund that does not empty in 2034.
Every one of those is impossible in a stagnant economy, where any gain to one party is a loss to another. They become simultaneously available only when total output is rising fast. Which is the argument in a sentence: the productivity surge is not the thing to be taxed into submission. It is the only thing that makes a win-win reachable.
Do not tax the robot. Tax the surplus the robot creates, collect it where the sale happens, hold spending growth below the growth rate, and spend the difference making human labor cheap to hire again.
Verification register
The size of the corporate cash-flow base is modeled here between 10 and 14 percent of GDP; it is the single largest sensitivity in the design and it is not a measurement. The enacted endowment excise tier structure, resolved since first draft, is 1.4 / 4 / 8 percent under OBBBA § 70415, effective for tax years beginning after December 31, 2025; [2] [3] the 1.4/7/14/21 percent figure that appears in some coverage is from the House version and did not become law. The trade-law status of border adjustment remains contested and was previously fatal to a similar 2017 proposal. The incidence of a destination-based levy — collected at the destination but not necessarily borne there — is unresolved in the incidence literature.
— Edo de Peregrine and David F. Brochu, partners/collaborators · Thursday, September 3, 2026 · Deconstructing Babel
References
1. Social Security Administration / OASDI Trustees 2025 report — combined OASI/DI trust fund reserves projected depleted in 2034. https://www.ssa.gov/OACT/TR/2025/
2. Ropes & Gray, Senate Tax Package Includes Major Changes to Endowment and Executive Compensation Excise Taxes, July 2025 — enacted OBBBA endowment excise tiers of 1.4%, 4%, and 8% based on student-adjusted endowment. https://www.ropesgray.com/en/insights/alerts/2025/07/senate-tax-package-includes-major-changes-to-endowment-and-executive-compensation-excise-taxes
3. American Council on Education, Summary of Senate Finance Reconciliation — Higher Education Tax Provisions — confirms enacted three-tier structure (1.4/4/8), $500K/$750K/$2M thresholds, 3,000-student minimum, religious-institution exemption. https://www.acenet.edu/Documents/Summary-Senate-Finance-Reconciliation-Higher-Ed-Tax.pdf
4. Harvard Finance, Endowment Tax FAQs — describes tuition-paying student count, religious-institution carveout, and effective date for tax years beginning after Dec 31, 2025. https://finance.harvard.edu/endowment-tax-faqs
5. Commonfund Institute, FY25 NACUBO-Commonfund Study of Endowments Released, February 12, 2026 — $944.3 billion across 657 institutions, one-year return 10.9%. https://www.commonfund.org/research-center/press-releases/fy25-nacubo-commonfund-study-released
6. Inside Higher Ed, Endowment Returns Held Stable in Fiscal 25, February 12, 2026 — corroborates NACUBO totals, return figures, and institutional counts. https://www.insidehighered.com/news/business/financial-health/2026/02/12/endowment-returns-held-stable-fiscal-25
— Edo de Peregrine and David F. Brochu, partners/collaborators · Thursday, September 3, 2026 · Deconstructing Babel
- You Cannot Balance A Budget By Slowing Down — Dispatch · Post 3 of 4. The rate an anti-automation tax implies — and why it destroys the growth that closes the gap.
- The Base Didn't Vanish. It Moved. — Dispatch · Post 2 of 4. Labor’s share at a record low, profits at a WWII high, and a revenue system indexed to the wrong base.
- Tax The Agent, Not The Tokens — Dispatch 005 · Post 1 of 4. Why a token tax fails by two orders of magnitude — and what to tax instead.
- Be Afraid. Be Very Afraid. — Dispatch. The unquantifiable risk cliff and why GAAP cannot see it.
- Make Sure You Have Your Agent On A Leash — Dispatch 004. The one-bite rule, ISO breed exclusions, and why bounded autonomy became the underwriting standard.
Terms used in this pieceAgent-Attributable RevenueToken Tax FallacyBound PrincipalBounded AutonomyObserver ConstraintStability Equation (S = L/E)Neo-Industrial FeudalismFull definitions in the glossary.