Appendix D

Implementation Mechanics & Ratification Sequence

Purpose

This appendix operationalizes the remedies adopted in A Declaration of Civic Breach and Renewal. It specifies implementation mechanics -- particularly for Social Security reform -- and classifies each remedy by constitutional amendment versus statute, with a sequenced path for enactment and ratification.

Part I - Social Security Transition: Detailed Mechanics

A. Eligibility Cohorts (Who Goes Where)

Cohort 1: Current Beneficiaries

• Individuals already receiving Social Security benefits at the date of enactment.
• Treatment: Benefits continue unchanged for life. No means testing. No election required.

Cohort 2: Near‑Retirees

• Individuals within 10 years of full retirement age at enactment.
• Treatment: Default continuation of legacy benefits; optional conversion of accruals to an individual account. Election is voluntary and irrevocable.

Cohort 3: Mid‑Career Workers

• Individuals more than 10 years from full retirement age at enactment.
• Treatment: Choice between (a) legacy benefit continuation or (b) full conversion of accrued contributions into an individual account via a transition settlement.

Cohort 4: New Entrants

• Workers entering the labor force after enactment.
• Treatment: Mandatory participation in the individual account system. No legacy benefit accrual.

B. Payroll Taxes During Transition

During the transition period, retirement funding is aligned with the uniform tax structure adopted herein. Contributions are reallocated, not increased, and are designed to ensure that mandatory deductions yield direct, individual benefit rather than generalized entitlement claims.

Employee Contribution (5 percentage points of the uniform 12 percent income tax):

• This contribution is not an additional tax, but a designated portion of the uniform 12 percent income tax already owed by the worker.
• For individuals remaining in the legacy system, this portion continues temporarily to fund benefits for current beneficiaries and near-retirees.
• For new entrants and participants who elect conversion, this portion is credited directly to the worker’s personal retirement account and ceases to fund future entitlement accrual.

Employer Contribution (10 percent of wages):

• Employers are required to contribute an amount equal to 10 percent of covered wages on behalf of each worker.
• This contribution is treated as deferred compensation and credited directly to the worker’s individual retirement account.
• Employer contributions do not pass through the general treasury and are not available for general expenditure.

Combined Effect:

• The structure ensures that no less than 15 percent of earnings (5 percent employee, 10 percent employer) is dedicated by law to retirement savings for participating workers.
• Payroll and income tax rates are frozen at baseline levels during the transition; no increases are permitted.

This framework converts mandatory deductions into individually owned retirement assets, restoring transparency, ownership, and value to required contributions while honoring existing benefit obligations and prohibiting the diversion of retirement funds into general governmental use.

C. Transition Settlement Option (Opt‑In Lump Credit)

Eligible taxpayers (Cohorts 2–3) may elect a Transition Settlement:

• Amount equals the inflation‑adjusted sum of employee + employer contributions paid on the worker’s behalf.
• Credited to the individual retirement account.
• Election is taxpayer‑initiated, time‑limited, and irrevocable.
• Once elected, no further legacy benefit accrues.

D. Legacy Benefit Financing (“Benefit Bond” Authority)

To honor earned benefits without means testing:

• Congress is authorized to issue Legacy Benefit Bonds solely to fund obligations to Cohorts 1 and 2 and non‑electing members of Cohorts 2 and 3.
• Bonds:
  • Are non‑renewable
  • Carry fixed maturities
  • Are amortized on a declining schedule
• Sunset: Authority automatically expires 65 years after enactment or when the final legacy beneficiary obligation is satisfied -- whichever comes first.

No new entitlement obligations shall be added during this period. This authority converts implicit, unfunded entitlement obligations into explicit, finite, and amortized instruments, improving transparency while prohibiting rollover, expansion, or renewal.

E. Individual Account Structure

Default Investment Options (Diversified Index Model):

• Lifecycle funds (age‑based glide path)
• Broad domestic equity index
• Broad international equity index
• Bond index
• Capital‑preservation fund

Rules:

• Default enrollment into lifecycle fund unless participant selects otherwise.
• No politically directed investment mandates.
• Assets held in trust, not commingled with federal funds.

Account administrators are subject to strict fiduciary duties to participants, enforceable by private right of action, and insulated from political direction or programmatic redistribution.

F. Withdrawals, Loans, Contributions, and Distribution Flexibility

Because individual retirement accounts established under this system constitute owned assets rather than entitlement claims, contribution and withdrawal rules are structured to preserve long-term security while restoring individual and family agency.

Mandatory Baseline Contributions

• Participation in the individual account system includes a mandatory baseline contribution equal to no less than 15 percent of earnings, comprised of:
  • 5 percent designated from the worker’s uniform income tax obligation, and
  • 10 percent contributed by the employer as deferred compensation.
• These mandatory contributions establish a minimum savings floor and are credited directly to the individual account. They do not pass through the general treasury and shall not be diverted for non-retirement purposes.

Voluntary Supplemental Contributions (No Cap)

• In addition to mandatory contributions, citizens may contribute unlimited additional amounts to their own individual retirement accounts.
• No statutory cap is imposed on voluntary contributions, recognizing that once mandatory savings are satisfied, additional saving reflects private prudence rather than public obligation.
• Voluntary contributions are fully owned by the account holder and subject to the same investment and inheritance rules as mandatory contributions.

Parental and Family Contributions

• Parents or legal guardians may make voluntary contributions to the individual retirement accounts of their children.
• Such contributions are capped annually at an amount aligned with prevailing defined-contribution limits (e.g., contemporary 401(k) contribution thresholds), adjusted periodically for inflation.
• Contributions to a child’s account are irrevocable gifts, held in trust for the child’s exclusive benefit, and shall not be reclaimed or encumbered by the contributor.

This structure permits families to assist in building long-term security for the next generation without undermining individual ownership or converting the system into a vehicle for unlimited intergenerational transfer.

Retirement Eligibility by Sufficiency, Not Age

• No fixed retirement age is required for account holders who have accumulated sufficient assets to self-fund retirement.
• A reference age -- aligned with the Social Security full retirement age at enactment -- serves only as a default benchmark, not a mandatory threshold.
• Account holders may elect to begin distributions earlier, provided their account balance meets minimum actuarial sufficiency standards designed to prevent premature exhaustion.

Account-Based Loans and Early Access

• Limited early access to account assets is permitted through self-directed loans, rather than permanent withdrawals.

• Permissible loan purposes include:

  • Primary residence purchase or down payment
  • Education or vocational training
  • Medical or family hardship

• Loans must be:

  • Secured solely against the individual’s own account
  • Subject to defined repayment schedules
  • Non-recourse beyond the account balance

• Repayments restore principal to the account, preserving retirement integrity while allowing life-cycle flexibility.

Distributions
Upon retirement or sufficiency election, participants may choose among:

• Lifetime annuity purchase
• Programmed withdrawals based on actuarial tables
• Lump-sum withdrawals, subject to annual caps to prevent rapid depletion

Safeguards and Inheritance

• Permanent early withdrawals outside defined loan and hardship frameworks are restricted.
• Accounts are fully inheritable by designated beneficiaries, reinforcing ownership, family continuity, and intergenerational stability.

This framework ensures that mandatory deductions produce tangible, individually owned assets, while voluntary saving and family support are encouraged rather than penalized. Retirement becomes a function of means, choice, and responsibility, not administrative age thresholds or pooled dependency. The purpose of this system is not to limit saving, but to ensure that mandatory contributions create real, owned assets; voluntary saving beyond that baseline is a private matter.

This transition is structured to avoid takings, impairment of contracts, or retroactive deprivation, and is designed to honor reliance interests consistent with constitutional limits. Nothing in this transition shall be construed to diminish accrued benefits, retroactively impair vested rights, or compel participation in market-based accounts for any individual with reliance interests under the legacy system. Elections are voluntary where offered, prospective where mandatory, and structured to preserve earned expectations consistent with the Takings Clause, the Due Process Clause, and established principles of non-retroactivity.

Part II — Classification of Remedies

A. Constitutional Amendments Required

1. Balanced Budget Requirement
2. No New Net Debt (except war/existential emergency)
3. Term Limits for Congress
4. Citizen‑Only Apportionment
5. Single‑Subject Rule for Legislation
6. Ban on Nationwide Injunctions
7. Line‑Item Veto Authority
8. Hard‑Asset Backing of the Currency (minimum backing and issuance constraints set constitutionally; composition and ratios set by statute)
9. Mandatory Agency Sunset (baseline constitutional requirement; statutory implementation governs duration and criteria)

B. Statutory Reforms

1. Immigration enforcement mechanics
2. Federal‑state enforcement cooperation
3. Tax system (12% income tax, 15% VAT, 25% corporate tax)
4. IRS scope reduction and default filing
5. Social Security transition program
6. Sovereign Indemnity reclassification for Veteran compensation
7. ACA repeal and health‑care market reforms
8. Medicare modernization and privatization path
9. Medicaid citizenship limitation
10. Privacy rights and surveillance bans
11. Congressional ethics and trading bans
12. Federal land divestment program

Part III — Tax Structure, Revenue Allocation, and Fiscal Convergence

Purpose and Design Principles

The tax structure adopted herein is designed to fund a constitutional federal government of limited and enumerated powers while restoring transparency, stability, and consent to public finance. The objective is not to maximize revenue, but to align taxation with legitimate federal functions and to ensure that mandatory contributions produce identifiable public or individually owned benefits.

This structure replaces complexity, exemptions, and indirect redistribution with low, uniform rates applied to broad bases, and explicitly distinguishes between government revenue and private retirement savings. It is not designed to sustain the present scale of permanent transfer programs funded by perpetual deficit, but to restore alignment between federal ambition and consented means.

A. Uniform Income Tax

A single, flat 12 percent income tax shall apply uniformly to all citizens, without exemptions, deductions, credits, or preferential treatment.

For purposes of this tax, income shall include all realized income from wages, salaries, business earnings, dividends, interest, capital gains, and pass-through entities, subject only to narrow definitional exclusions necessary to prevent double taxation of previously taxed principal.

Five percentage points of this tax are designated as mandatory retirement savings and are credited directly to the individual retirement account of the taxpayer.

The remaining seven percentage points constitute general federal revenue.

The retirement-designated portion does not enter the general treasury, is not available for appropriation, and shall not be repurposed for non-retirement use. It represents a reallocation of mandatory taxation into individually owned assets rather than an increase in the tax burden.

B. Uniform Consumption Tax (Value-Added Tax)

A 15 percent value-added tax (VAT) shall apply broadly to goods and services consumed within the United States.

The VAT serves as a primary revenue stabilizer, capturing economic activity that may not be reflected fully in income reporting and providing a broad, difficult-to-avoid base for funding core federal functions.

To prevent undue hardship without creating new entitlement bureaucracies, unprepared food, prescription medicine, and residential utilities shall be exempt (Zero-Rated) from the VAT. This ensures that the tax burden falls on discretionary consumption, not on survival. No other credits, deductions, or graduated rates shall be introduced.

Abolition of the Payroll Tax:
This structure replaces the regressive Payroll Tax system entirely. By eliminating the tax wedge on labor, this plan immediately increases the take-home pay of the working class and lowers the cost of hiring. The working poor gain purchasing power, as their essential spending remains untaxed while their earnings are relieved of the payroll burden.

The VAT is intended to fund core federal functions and transitional obligations, not to serve as a vehicle for behavioral regulation, industrial policy, or social engineering.

C. Uniform Corporate Tax on Profits

A flat 25 percent tax on corporate profits shall apply to all corporations operating within the United States.

The tax base shall be simplified and anchored to realized profits to minimize avoidance, reduce arbitrage, and discourage offshoring. Preferential credits, targeted exemptions, accelerated depreciation schemes, and industry-specific carve-outs are prohibited.

For multinational firms, profit attribution shall be governed by clear apportionment rules designed to prevent artificial profit shifting while preserving competitiveness and predictability.

This rate is designed to balance revenue sufficiency with economic neutrality and long-term investment stability.

D. Revenue Allocation and Separation

Revenues generated under this structure are classified as follows:

Private Retirement Assets:
Mandatory retirement contributions designated under the income tax are the property of the individual and are held in trust. They do not constitute government revenue and shall not be counted toward federal receipts.

General Federal Revenue:
Net income tax receipts, VAT receipts, and corporate tax receipts fund only:

• National defense
• Courts and law enforcement
• Diplomacy
• Administration of federal law
• Interstate commerce and infrastructure
• Transitional legacy obligations authorized herein

This separation is mandatory and must be enforceable. No retirement-designated funds shall be diverted, pledged, borrowed against, or otherwise encumbered for general governmental use. Diversion of such assets is prohibited and enforceable by private right of action.

National Defense and Strategic Retrenchment:
Revenues are authorized solely for the common defense of the United States, its territories, and the strategic approaches of the Western Hemisphere.

This structure explicitly rejects the funding of permanent foreign occupation, nation-building, or the subsidized defense of wealthy allied nations. The revenue limits imposed by this Declaration are intentional constraints designed to compel a transition from global hegemony to republican defense. The United States shall maintain a military of unsurpassed lethality for the protection of its own sovereignty, but shall not tax its citizens to police the world.

E. Fiscal Discipline and Convergence

This tax structure is intentionally calibrated to constrain federal ambition to sustainable levels. It is designed to converge revenues and expenditures through reduction of structural obligations, not through hidden taxation, perpetual borrowing, or monetary dilution.

Federal revenues under this framework are sufficient to support core constitutional functions and time-limited transition obligations. No new unfunded entitlement obligations shall be created during the transition period.

As legacy entitlement obligations sunset, spending shall decline correspondingly. Where revenues are constrained, spending must adjust. No automatic expansion of programs or obligations is permitted absent explicit authorization and visible taxation.

The limitation imposed by this structure is not a defect, but a feature: it restores the principle that the government must operate within the bounds of consented means.

F. Transparency and Enforcement

All tax collections and allocations shall be subject to standardized public reporting, including:

• Separation of government revenue from private retirement assets
• Long-horizon revenue and expenditure projections
• Clear identification of transitional versus permanent obligations

No off-balance-sheet financing, indirect redistribution through the tax code, emergency normalization of taxation, or reclassification of private assets as public funds is permitted.

Closing Principle

This tax system is designed to make the cost of government visible, finite, and honest. It funds what the federal government is empowered to do, declines to fund what it is not, and ensures that mandatory contributions yield either public goods or privately owned assets -- but never unaccountable intermediaries.