Economics

The Graduated Flat Tax

Two rates, no games. The local poverty line is used as the threshold — acknowledging that $40,000 means something very different in rural Alabama than in San Francisco.

† Standard CONUS baseline shown — applies in the roughly 2,600 of the nation's ~2,900 counties GSA designates as standard cost-of-living areas. In the ~300 localities GSA designates as higher-cost Non-Standard Areas, the poverty line threshold rises with local GSA per diem rates. Example: approximately $29,500 single / $40,000 couple in New York City; approximately $32,600 single / $44,300 couple in San Francisco (FY2026 rates). The mechanism: local poverty line = national base guideline × (local total GSA per diem rate ÷ standard CONUS per diem rate), using total per diem (lodging + meals and incidental expenses combined). Every locality uses an annual average rather than a point-in-time rate. The Treasury Department publishes updated locality-adjusted poverty lines by March 1 each year, based on the average per diem rate of the most recently completed GSA fiscal year — the same basic timing approach ACA premium tax credits already use (prior year's guidelines, not an estimate of the current year). Taxpayers report the ZIP code where they lived for the majority of the tax year; ZIP codes are converted to the applicable GSA locality using the existing HUD/Census ZIP-to-county crosswalk, since GSA per diem localities are defined by county, not ZIP code. This is the best available granular, federally-maintained, annually-updated proxy for local cost variation that already exists — not a purpose-built cost-of-living index. Per diem rates are built for short-term business travel (hotels, restaurant meals), not long-term residency (rent, groceries). It's a real improvement over one flat national number, not a perfect one, and should be described that way.

Capital gains are treated as ordinary income — added to total earnings and taxed at the applicable bracket. No special treatment, no loophole. The stepped-up basis at death is kept to incentivize generational wealth building. Payroll taxes (Social Security and Medicare) are unchanged.

What This Means for Real People

Every income level sees a cut. The corporate tax nearly triples from an effective ~15% to 35%, offsetting the individual reduction. The burden shifts from workers to corporations.

A married couple earning $86,000 — roughly the current national median household income — currently owes about $5,960 in federal income tax (2026 law: $32,200 standard deduction, 10% up to $24,800 of taxable income, 12% above that). Under this platform's system, in the ~2,600 counties using the standard baseline, the same household owes 5% on income above the $21,640 couple poverty line: 5% of $64,360, or about $3,218. That's a savings of roughly $2,740/year, about 46%. This compares federal income tax only; payroll taxes for Social Security and Medicare are unchanged under this platform, and this doesn't account for credits like the Child Tax Credit that could lower a real family's current-law liability further. Households with children or other credits under current law would see a smaller gap than this example shows. In the ~300 higher-cost localities using an adjusted poverty line (see footnote above), the same household would see an even larger reduction, since more of their income falls in the 0% band.

Some of that corporate tax increase will likely be passed through to consumers in the form of higher prices — that is a normal corporate response to a higher tax rate, and pretending otherwise would be dishonest. The case for the increase still holds for three reasons: first, the current ~15% effective corporate rate already reflects extensive use of offshoring and loopholes that ARSA's domestic-investment requirement is specifically designed to close, meaning part of the "increase" is recapturing revenue that is currently being avoided rather than piling new tax on top of what's actually being paid today. Second, the 0% bottom bracket and reduced individual rates put money directly in every worker's pocket regardless of what happens to consumer prices elsewhere. Third, price pass-through is strongest in industries with little competition — which is exactly the kind of market concentration this platform's broader competition and anti-monopoly positions (see Technology & the Future) are aimed at reducing over time.

Incentives for Domestic Production

A carrot and a narrow stick, not broad tariffs that raise prices for everyone. The carrot is already built into ARSA's Domestic Capital Anchor: when Individual Investment Accounts are restricted to US-listed equities, 160 million workers become a unified shareholder bloc with a direct financial stake in keeping corporate profits and investment onshore — an estimated $700–900 billion in annual captive investment inflows for companies that stay US-listed. The stick is narrow and targeted: sector-specific tariffs aimed at particular import-competing industries where domestic manufacturing capacity is being actively undercut, not a blanket tariff regime that raises prices on everyday goods across the board. Broad, across-the-board tariffs remain off the table — the distinction is between protecting specific strategic manufacturing capacity and taxing every import a family relies on.

Small Business First Policy

Easier access to credit, fewer compliance traps, faster approvals. Federal contracts prioritize small businesses, ensuring innovation and opportunity remain widely distributed rather than concentrated in the hands of a few large corporations.

Hard Cap on Deficit Growth — 2.5% of GDP

The long-term goal is a balanced budget every year. The realistic cap is 2.5% of GDP — approximately $700 billion at current GDP versus today's $1.8 trillion deficit. Any spending beyond the cap requires a formal override by a 2/3 supermajority of Congress. Congress controls the purse. That is not a policy preference — it is the Constitution.

Homeowners Insurance: Availability Is the Crisis, Not Just Price

The homeowners insurance crisis is, at its core, an availability problem, not just a pricing problem — and availability is getting worse faster than price. Seven of California's 12 largest home insurers have reduced or halted new underwriting since 2020, pushing homeowners onto state FAIR plans — last-resort backstops that were designed for a small slice of the market, not the mass market they are now being forced to serve. Average California homeowners insurance premiums rose 84% between the end of 2020 and March 2026. Midwest and Great Plains states saw costs jump more than 35% since 2023 from severe convective storms. This isn't confined to wildfire country — it's a national structural problem driven by climate-related losses, sharply higher reinsurance costs, and the mismatch between state rate-approval systems designed for a stable loss environment and the volatile one we actually have now.

Insurance regulation is state law, not federal — there is no federal property and casualty insurance regulator. A Sunsetter serving in state government brings three standards to this. First: a state FAIR plan is a backstop, not a permanent market substitute. A state that allows private insurers to retreat wholesale and replaces them with an undercapitalized state plan is not solving the problem — it's socializing it quietly and setting up for a much larger fiscal crisis when a major event hits. Sunsetters support requiring insurers to maintain meaningful market participation as a condition of doing any business in the state, not just cherry-picking low-risk policies while offloading high-risk ones to a public backstop.

Second: insurers should price and disclose risk transparently, including giving homeowners who invest in risk-reduction measures — home hardening against wildfire, flood mitigation, storm-resistant construction — a real, verifiable premium credit. California and Alabama have both required such credits; the problem is that some insurers issue the credits and still non-renew the policies, suggesting the pricing credits aren't the primary driver of the withdrawal. The credit requirement has to be paired with meaningful market participation requirements, or the credit is a gesture on top of a retreat. Third: state insurance departments need real-time, granular data on non-renewal and withdrawal patterns before they happen, not after — the current pattern of insurers quietly reducing exposure over several years before an official exit announcement means regulators and homeowners are always reacting to a fait accompli rather than engaging with a decision while it's still being made.

Auto Insurance: Stop Pricing Your Credit History, Price Your Driving

Auto insurance is mandatory in every state. A mandatory product priced on factors that have nothing to do with how you actually drive is a regressive tax on being poor.

Credit-based insurance scoring is the specific practice at issue: in 46 states, your credit history is factored into your auto insurance premium, and by most accounts it's weighted more heavily than your actual driving record. A driver with a clean record and poor credit pays an average of $1,012 per year for state-mandated auto insurance nationally — 115% more than an identical driver with excellent credit, for mandatory coverage against the same risks, on the same roads, in the same car. That premium difference has nothing to do with how either driver actually drives.

Four states have banned it — California, Hawaii, Massachusetts, and Michigan — and the markets in those states function. California has 546 domestic auto insurers competing without credit scoring. Massachusetts has maintained a functional market prohibiting credit scoring for both auto and homeowners. The industry argument that banning credit scoring will cause market collapse doesn't hold up against six decades of California data and multiple decades of Massachusetts data showing it doesn't.

The insurance industry's statistical counterargument is real and shouldn't be dismissed: credit scores do correlate with claims frequency in aggregate actuarial data. But correlation isn't the same as causation, and pricing a mandatory product based on a factor correlated with poverty — rather than the driving behavior that's the actual insured risk — produces a discriminatory outcome regardless of the intent behind the model. A Sunsetter serving in state government supports banning credit-based insurance scoring for mandatory auto insurance. Bills to do exactly this were introduced in Iowa, New York, Oklahoma, and Pennsylvania in 2026 — bipartisan, not ideologically uniform legislation — with active state legislative momentum that mirrors the trajectory California, Hawaii, Massachusetts, and Michigan were on before they each passed their own bans.

No Exclusions for Foreseeable Natural Events

The 'act of God' exclusion is a legal artifact built on the premise that natural disasters are unforeseeable. That premise is no longer true for most of the events it's being used to exclude. We have century-long flood plain maps, seismic hazard models, wildfire risk scores, and hurricane track models — the data to price these risks exists, has existed for decades, and the insurance industry already uses it internally to decide where to write and where to withdraw. The actuarial foreseeability of a flood in a 100-year flood plain, an earthquake along a mapped fault, or a wildfire in a high-risk zone is not in question. Only the coverage is.

The specific exclusions that cause the most harm — flood and earthquake, which standard homeowners policies almost universally exclude and require separate policies to cover — are also the events with the most robust, publicly available risk data. The National Flood Insurance Program exists specifically because private insurers won't cover the risk — and yet 90% of presidential disaster declarations involve flooding. That's not unforeseeable. That's a risk the private insurance market has chosen not to price rather than cannot price.

A Sunsetter serving in state government supports requiring that standard homeowners policies cover all foreseeable natural perils — wind, hail, wildfire, flood, earthquake — without requiring separate riders or government-backstop programs. Insurers may price these perils differently based on actual, data-driven local risk: a home on a mapped fault line in a high-seismic zone will pay more than a home on bedrock in a low-seismic zone. That's appropriate and expected risk-based pricing. What's not appropriate is excluding the coverage entirely and leaving homeowners exposed to losses the insurer's own models could have priced.

No Rate Increases for Not-At-Fault Incidents — Zero Exceptions

In most states, your auto insurance premium can be increased after an accident that was entirely someone else's fault. The average not-at-fault accident results in a $2,041 annual premium increase nationally — drivers are being financially penalized for something another person did. California bans it under Proposition 103. New York bans it under Insurance Law §2335. DC bans it by statute. Oklahoma bans it. Virginia restricts it. That's five states, and 45 states where an insurer can and does charge you more for being the victim of another driver's mistake.

A Sunsetter serving in state government supports an absolute prohibition on rate increases for not-at-fault incidents — no exceptions, no 'likelihood to be involved in future accidents' actuarial carve-out, no policy-filing workarounds. If a driver did not cause the incident, their premium does not go up for it. Full stop. The insurer's recourse is to pursue the at-fault party, which is what subrogation rights exist for — not to pass the cost to the person who was wronged.

Mandatory 20% Repair Reserve — The Insured's Own Account, Not the Insurer's

Every insurance premium payment — homeowners or auto — includes a mandatory 20% contribution into a dedicated repair reserve account held specifically for the insured item named on the policy: this specific house, this specific vehicle. The account belongs to the insured person. Interest and dividends earned on the reserve balance stay with the insured, not the insurer — the account grows from both premium contributions and investment returns.

The reserve is used for repairs to the insured item, the same repairs a standard claim would cover. It is not a deductible substitute — when a major loss occurs, the insurer still pays the full covered claim regardless of what's in the reserve. The reserve is supplemental capacity the insured controls directly, without having to file a claim, wait for adjuster approval, or negotiate a settlement for smaller repairs that would otherwise not meet a deductible threshold.

The account accumulates until its value reaches the replacement value of the insured item — the full cost to replace the home or vehicle as of current market rates, reassessed at each renewal. At that point, the insured's premium drops by the 20% reserve contribution going forward, permanently. They've effectively self-funded the replacement value; the insurer's ongoing exposure is now covered by the accumulated reserve rather than the premium stream, so the premium reflects that. This is the reward for long-term policyholders that the current insurance market doesn't offer anywhere: decades of paying premiums without major claims builds a real, owned, interest-bearing asset rather than simply enriching the insurer's surplus.

This is a state-level insurance regulation matter — same jurisdiction as every other position in this section — and a Sunsetter serving in state government supports requiring this structure as a standard policy feature, not an optional rider insurers can choose to offer or withhold. The mechanics (account custody, investment options, permitted uses, valuation methodology for the replacement-value cap) are details for state insurance departments to specify in implementing regulations, following the same standard they already apply to policyholder surplus and reserve requirements on the insurer side.

Public Insurance Option — Government as a Real Competitor, Not a Backstop

State and federal governments may establish and operate their own insurance brokerages, competing directly in the homeowners and auto insurance markets on the same terms as private insurers — same coverage requirements, same mandatory repair reserve, same natural disaster coverage obligations, same prohibition on credit-based pricing and not-at-fault rate increases. Every standard in this section applies equally to public and private insurers. This is not a carve-out for government to operate a lesser product; it's an authorization for government to operate the same product with a different ownership structure and without a profit extraction obligation.

This is a genuinely different proposal from the state FAIR plans that already exist — Citizens Property Insurance in Florida, the California FAIR Plan, and similar backstops in more than 30 states. Those programs are last-resort options for homeowners the private market won't cover, and they've been widely documented as providing worse coverage, charging more than the private market, and creating fiscal exposure for the broader tax base. This platform explicitly does not propose more of that model. A government insurer under this framework is not a backstop for the uninsurable — it's a full-market competitor that happens to be publicly owned, structured the same way as the consumer-owned utility model this platform supports elsewhere: no shareholder return obligation, no profit extraction, rates set to cover costs and build reserves rather than to generate investment returns for outside owners. The competitive pressure of a well-run public option is what disciplines private insurer pricing without banning the private market or forcing anyone into the public option.

The same authorization extends to the federal government — not as a preemption of state insurance regulation, which remains state jurisdiction, but as a parallel market entrant that can operate across state lines where private insurers have withdrawn, particularly in markets where the availability crisis has left homeowners with no real private option at all.

One additional constraint applies specifically to government-operated insurance entities under this framework: investment of insurance reserves — both the mandatory 20% repair reserves held on behalf of policyholders and the insurer's own surplus and operating reserves — is limited to US-listed securities only. No foreign equities, no offshore funds, no instruments issued by entities incorporated outside the United States. This is the same Domestic Capital Anchor principle already built into ARSA's Individual Investment Accounts elsewhere in this platform: capital generated by American policyholders paying American premiums stays working in the American economy, not exported to foreign markets. A government-operated insurer investing public-adjacent capital offshore would directly contradict the domestic investment logic this platform applies everywhere else capital pools of this scale are under public influence. The restriction applies to the government insurer's own reserves; private insurers operating under the same regulatory framework are governed by existing state investment regulations, which this platform does not override.