Deficit Impact

Q&A: How the "0/100 Rate" Tax Plan Impacts the Deficit

Q1: Does this plan increase or decrease the federal deficit in Year 1?

A: The plan is designed to be deficit-neutral in its first year, meaning it should not increase the deficit. It relies on a combination of spending cuts and revenue-broadening measures to completely offset the trillions of dollars lost by untaxing the first $100,000 of income for all Americans.

Q2: What is the primary mechanism used to balance the ledger?

A: The main tool is an immediate, across-the-board 6.5% spending cut. Applied to a standard $6.9 trillion federal budget, this spending freeze generates $448.5 billion in immediate savings. According to the plan, this cut fully covers the net tax-cut obligations and leaves an $18.5 billion "protection cushion" to guard against unexpected deficit spikes.

Q3: Where does the rest of the offsetting revenue come from?

A: The plan relies on two additional financial pillars to prevent a deficit:

Base Broadening ($250 billion): Eliminating all tax shelters, special interest carve-outs, and corporate deductions forces high earners and conglomerates to pay a hard 20% floor, bringing previously lost revenue back to the Treasury.
Dynamic Growth ($170 billion): Untaxing the first $100,000 injects liquidity into the economy. The plan models a conservative 20% "dynamic feedback loop," where increased consumer spending and business formation generate new tax revenues.

Q4: What happens to the deficit in Years 2 through 4?

A: The plan implements a strict baseline spending freeze capped at Year 1 levels. Federal agencies must absorb inflationary costs through efficiency. The deficit is projected to shrink incrementally through a multi-year discipline framework:

Year 2: Eliminating duplicate government agencies.
Year 3: Reducing operational outlays.
Year 4: Conducting a final solvency audit to achieve a completely balanced budget.

Q5: Is there a penalty if the plan fails to prevent a deficit?

A: Yes. The plan includes an automatic accountability trigger tied to a 3-year performance window:

If a deficit occurs: Universal austerity measures are automatically triggered, forcing immediate federal spending rollbacks to protect the ledger.
If a balanced budget is sustained: The flat tax rate drops from 20% to a permanent floor of 15%.

Fund the Change — $5