Government financing through sovereign stocks and milestones towards a tax-free state
・ Share conversion of new government bonds and every 10 years
Stock merger adjustment -
Ver 1.0/August 27, 2026
Summary
- A summary
This white paper presents a “soverered stock” concept that converts Japanese finances, which depend on accumulated deficit bonds, into capital raising without redemption obligations. The newly issued loss-making government bonds were converted into government stocks without voting rights and allocation, and the decline in stock prices is
Adjusted by stock merger every 10 years. In this way, we will reduce interest payment costs, secure permanent financial resources for tax cuts, and aim for a tax-free country in 50 years.
- Current situation
The balance of government bonds is 1,342 trillion yen, of which about 1,000 trillion yen is deficit government bonds
About 1/4 of the expenditure is the cost of government bonds (interest payment + redemption)
A structure that is criticized as “the financial resources are tax increases or national bonds” even if the tax cut is appealed
As long as government bonds are “debts that must be repaid”, tax cuts will only be postponed to future generations.
- Solution: Sovereign stock (Sovereign
Equity)
Definition: Government-issued voting rights and distribution
Do not have the right to claim and the right to claim the distribution of residual property
Perpetual shares.
Features: Issued at 10,000 yen per share, can be bought and sold freely in the market, no redemption obligation, no interest payment or distribution, and does not affect government governance
In accounting, it is recorded as “capital” rather than liabilities.
- Core mechanism: New government bond share transfer
Exchange
Previously: 30 trillion yen short of income → deficit government bonds
Issuing 30 trillion yen → Increase in debt
Proposal: 30 trillion yen shortfall in income → issuance of 3 billion shares (10,000 yen/share) of sovereign shares → Capital
Increase
Existing deficit government bonds that have reached maturity will also be converted to the same amount of state-owned shares without cash redemption.
Ru.
- Stock price maintenance mechanism: stock merger every 10 years
Rules: 10 shares every 10 years from the date of issuance
Merger into 1 share (automatic activation clause in the articles of incorporation)
Effect: For example, even if the stock price falls to 3,000 yen, it will be restored to 30,000 yen by annexation. The amount of capital remains the same.
Investor protection: The merger applies equally to all shareholders, and there is no dilution of value.
- Financial effect simulation
0-10 years: 30 trillion yen per year, cumulative 300 trillion
Yen, first merger, interest payment reduction of 3 trillion yen per year 10-20 years: 30 trillion yen per year, cumulative 600 trillion
Yen, second merger, interest payment reduction 7 trillion yen per year 20-30 years: 30 trillion yen per year, cumulative 900 trillion
Yen, third merger, interest payment reduction of 12 trillion per year
A yen
30-50 years: 30 trillion yen per year, cumulative 1500
Trillion yen, 5th merger, interest payment reduction year 20
More than trillion yen
- Milestones to a tax-free country
Phase 1 (2026-2036): Deficit government bond issuance
Stop the line. Complete transition from new government bonds to stock conversion. The capital is 300 trillion yen.
Phase 2 (2036-2046): Interest payment fee
Tax reduction capitalization. Income from floating interest payment
Expansion of the basic deduction of tax and resident tax. Accumulation
600 trillion yen.
Phase 3 (2046-2056): Abolition of consumption tax. Replace 10% consumption tax with stock issuance profits. Consumption tax to 0%. Cumulative 900 trillion yen.
Phase 4 (2056-2066): Stock replacement for basic tax. Income tax and resident tax up to 5 million yen per year are virtually tax-free. Cumulative 1200
TRILLION YEN.
Phase 5 (2066-2076): Completion of a tax-free state. Basic expenditures are financed by the management and new issuance of soveree capital. The remaining tax is carbon
Policy taxes such as taxes and luxury taxes only.
- Application to the US version
The United States has an annual budget deficit of $2 trillion and a Treasury bond balance of $35 trillion. Issued 20 billion shares per year for a soverest stock of $100 per share. $20 trillion in capital in 10 years. In the United States, where the stock culture is rooted, market absorption is easy, and the abolition of the minimum income tax rate is possible early.
- Risk and response
Inflation risk: Direct underwriting by the Bank of Japan and pension funds is prohibited, and only market procurement
Liquidity risk: The government sets a certain buyback limit as a market maker
Legal issues: Amendment of Article 4 of the Finance Act and the establishment of the Government Corporation Special Act under the Companies Act are required
- Conclusion
As long as deficit government bonds are “debts”, the country cannot escape the deficit. From the moment it is replaced with “capital”, the country will not be in the red.
Stock conversion in new countries and stock mergers every 10 years. These two make it possible to reduce taxes and open the door to a tax-free country.