Banks as the rails: real-time taxes, custody, and one weekly deposit

Every transfer program in the United States has the same three costs: deciding who qualifies, collecting what funds it, and getting money to people. The Universal Income System removes the first cost entirely (every adult qualifies) and moves the other two onto the banks, which already do both for a living.

Three jobs for the banks

Collection. Income tax is withheld the moment income lands in an account, at the account holder's marginal rate, and swept to the Public Income Pool (PIP) in real time. There is no annual return for the roughly 95 percent of people below the $150,000 threshold, because their rate is zero. Above the threshold, a tax clock starts the day cumulative income for the year crosses the line, and the bank withholds from that day. Corporate and other taxes flow the same way. The bank's reporting is the audit trail.

Custody. The share levy (piece 4) delivers non-voting shares from large companies to the Trust Fund. Banks hold them as custodians, the same way they hold shares for any client today, so the fund needs no trading floor of its own and no company has to deal with a government shareholder directly.

Delivery. Every adult receives one weekly deposit. Children's payments go to the parents' account; the child trust deposit goes into the pooled fund. Social Security already moves about 70 million payments a month by direct deposit²; this is the same rail, running weekly, for every adult.

The one rule

Nothing goes from the pool to a household directly. Every dollar passes through a bank account in a named person's name. The reason is not convenience. A single, visible channel is what lets anyone, from the Treasury to a journalist, reconcile the pool's outflow against the payments that landed. It also means fraud has to pass through a bank's identity checks, which are already the strongest identity infrastructure the country has. The piece's biggest risk, named plainly: when banks handle everything, cybersecurity and identity fraud are the attack surface, and the system needs to be designed as if it will be attacked every day.

What the banks are paid

A fee of 0.5 percent of PIP inflow, paid from the pool, never from users. No overdraft fees, no account fees, no charge for the deposit. The fee is small as a share and large in dollars, and the design puts half of it to work: banks must reinvest half the fee as 25 percent first-loss equity in new housing, the engine described in piece 8. The other half is theirs.

At the default fee, banks earn about $55 billion in 2027 and $129 billion in 2045, and the fee costs each adult about $200 a year off the payment. Raise the fee and the payment falls one-for-one; cut it and the housing engine slows. We think 0.5 percent is near the floor of what gets every bank to participate, and that the housing requirement is what makes the fee defensible to the public.

What the program replaces

One weekly deposit replaces Social Security retirement and disability, SSI, SNAP, TANF, unemployment insurance, the EITC and the child tax credit, and most housing aid. Each of those programs has eligibility rules, an application, a review cycle and an appeals process. Each has a cliff where earning a dollar more costs benefits. None of that survives. Retirees are the clearest winners: $52,000 at the target versus an average Social Security retirement benefit of about $24,000 today. What does survive is a separate, lean federal budget for the things cash cannot buy: a health public option with a catastrophic cap, extreme disability and long-term care, veterans' health (piece 10).

Reaching everyone

About 4 percent of households have no bank account¹. The system cannot launch until it reaches them, which means a basic account at every bank, opened with the same identity check the deposit relies on, with no minimum balance and no fees. The weekly deposit is the reason to open one. We expect the unbanked share to go to near zero within the first year, because the account is where the money is.

Rollout

This is the easiest piece of the system to start, and the order of the whole rollout follows from it: real-time bank withholding and reporting first; one consolidated payment on Social Security's rails second; universal child accounts third, building on the 2025 child savings accounts⁴. Each of those can begin under existing law or with narrow legislation, before the harder pieces (the share levy, the money agreement) are in place.