diff --git a/JoshHeaps.Net/Content/Socialism/founder-problem.md b/JoshHeaps.Net/Content/Socialism/founder-problem.md
index d0d8a0b..b652634 100644
--- a/JoshHeaps.Net/Content/Socialism/founder-problem.md
+++ b/JoshHeaps.Net/Content/Socialism/founder-problem.md
@@ -35,7 +35,7 @@ Three caveats about these numbers:
 
 - **They assume the firm exists and works equally well either way.** That's the big assumption. If co-op ownership makes firms less productive, or if the firm would never have been founded as a co-op, the comparison is moot. The first is exactly what [the pilot](pilot-spec.md) measures. The second is the founder problem itself.
 - **They're a simple model, not a forecast.** Founders start at a full share. New hires join as members after three months and ramp up to a full share over five. The part of a share they don't get yet goes to the reserve, as tax law requires, not to the founders ([How a Locked Co-op Is Taxed](taxes.md#the-tenure-ramp)). An earlier version of this table let it go to the other members, and showed co-op founders with roughly twice as much. Payroll tax on the founding share is left out too. The workforce grows steadily to the size shown. Change the growth rate or the sale price and the ratios move, but the gap never comes close to closing.
-- **Taxes are left out on both sides.**
+- **Taxes are left out on both sides.** Counting them would widen the gap, not close it. The owner of a partnership or S corporation can usually deduct up to 20% of the business's profit, which a co-op member can't ([How a Locked Co-op Is Taxed](taxes.md#how-this-compares-with-other-businesses)). In most industries, a founder who sells shares in an ordinary small corporation after five years can leave up to $15 million of the gain untaxed, or ten times what they put in if that's more ([26 U.S.C. § 1202](https://www.law.cornell.edu/uscode/text/26/1202)), and a co-op founder has no sale to leave untaxed.
 
 ## Where the money went
 
diff --git a/JoshHeaps.Net/Content/Socialism/open-problems.md b/JoshHeaps.Net/Content/Socialism/open-problems.md
index 3855071..d6b2283 100644
--- a/JoshHeaps.Net/Content/Socialism/open-problems.md
+++ b/JoshHeaps.Net/Content/Socialism/open-problems.md
@@ -31,7 +31,7 @@ An honest list of what the model hasn't solved yet, most dangerous first.
 
 14. **Drift toward the safest co-ops.** *(Partly answered.)* A bank that lends only to co-ops can still lend mostly to the safe ones, like consultancies started by people with savings, as America's co-op bank did. [Who the Bank Lends To](who-gets-loans.md) sets aside $90 million of the loan money for co-ops in lower-paid work, half of it for the lowest-paid industries, which goes back to the general pool only if the reviewers certify the bank handled those applications fairly. Results are reported for that group and for first-time owners without much wealth, and the verdict has to say which kinds of co-ops it covers. Still open: the set-aside makes money available but can't make groups apply; within each half it can be used mostly on the better-paid end; "lower-paid" is judged by industry, which leaves out poorly paid co-ops in well-paid industries and can be gamed by how a co-op describes its work; first-time owners without wealth get reporting, not money; and in work whose prices are set by Medicaid or contractors, a failure may say more about the price than about co-ops. Even measuring who gets loans needs its own rule: lending rules bar asking applicants' race and sex, and the federal exception for small-business lenders won't reach a bank this small, so the bank's law has to require the question, and a later Congress could drop it ([Asking needs its own legal basis](who-gets-loans.md#treated-the-same)).
 
-15. **Taxes.** *(Partly answered.)* A locked co-op is a corporation that pays tax once on members' profit shares, under the part of the tax code written for co-ops. [How a Locked Co-op Is Taxed](taxes.md) fits the model to it: profit is shared per hour worked, workers who aren't members get a share too, wages reach the going rate before any profit is shared, and charges come out of the current year's share before older, already-taxed balances. Still open: nobody has ruled that a co-op with an outside lock-holder and a reserve that goes to the federation counts as a co-op for tax purposes; whether profit shares owe payroll tax is unsettled; the ramp no longer shields senior members from new hires unless it's paid as wages; workers without work authorization can't be members; the kept reserve pays 21% even though nobody owns it; the return on members' accounts probably can't be deducted, so account holders' returns are credited after the co-op's tax ([Interest on accounts](taxes.md#interest-on-accounts)); following the deferred-pay rules for lower-income members' untaxed credits could be read as conceding that the credits are pay; and a member who loses their account when a co-op fails can probably deduct only $3,000 a year of it, after being taxed on it in full, until Congress refunds that tax.
+15. **Taxes.** *(Partly answered.)* A locked co-op is a corporation that pays tax once on members' profit shares, under the part of the tax code written for co-ops. [How a Locked Co-op Is Taxed](taxes.md) fits the model to it: profit is shared per hour worked, workers who aren't members get a share too, wages reach the going rate before any profit is shared, and charges come out of the current year's share before older, already-taxed balances. Still open: nobody has ruled that a co-op with an outside lock-holder and a reserve that goes to the federation counts as a co-op for tax purposes; whether profit shares owe payroll tax is unsettled; the ramp no longer shields senior members from new hires unless it's paid as wages; workers without work authorization can't be members; the kept reserve pays 21% even though nobody owns it; members can't take the 20% deduction owners of partnerships and S corporations get, so the co-op comes out ahead of partnerships only if profit shares escape payroll tax ([How this compares](taxes.md#how-this-compares-with-other-businesses)); the return on members' accounts probably can't be deducted, so account holders' returns are credited after the co-op's tax ([Interest on accounts](taxes.md#interest-on-accounts)); following the deferred-pay rules for lower-income members' untaxed credits could be read as conceding that the credits are pay; and a member who loses their account when a co-op fails can probably deduct only $3,000 a year of it, after being taxed on it in full, until Congress refunds that tax.
 
 11. **Federal or state?** *(Mostly answered.)* The test stays federal, because one bank with one plan makes one clean experiment. Any state can copy the bank under the same published rules, reported separately, and a model state law protects the lock for co-ops that choose it ([The Lock in State Law](lock-state-law.md); [Making It Last](durability.md#federal-test-state-copies)). No state has adopted anything like it, and a co-op organized in a state that hasn't relies on its charter alone. Still open: whether a few state lenders sharing one plan would have been the stronger experiment after all, since the most durable public bank in America, North Dakota's, is a state bank.
 
diff --git a/JoshHeaps.Net/Content/Socialism/taxes.md b/JoshHeaps.Net/Content/Socialism/taxes.md
index e339cf5..b48c6ee 100644
--- a/JoshHeaps.Net/Content/Socialism/taxes.md
+++ b/JoshHeaps.Net/Content/Socialism/taxes.md
@@ -195,15 +195,33 @@ The IRS gives binding answers on specific facts, called private letter rulings,
 
 - **The first pilot co-ops ask, and the bank pays.** They ask whether the co-op operates on a cooperative basis with the lock and the reserve, whether the per-hour profit shares and the ramp count as patronage dividends, whether the founding share is deductible as pay, whether profit shares carry payroll tax when wages meet the going rate, how charges moved back to the reserve are taxed, whether the return on accounts strains the cooperative test and when members are taxed on it, and whether the deferred-pay rules, or the payroll-tax rule for deferred pay ([26 U.S.C. § 3121(v)(2)](https://www.law.cornell.edu/uscode/text/26/3121)), apply to nonqualified credits at all.
 - **Until then, every co-op uses the rules on this page, and gets a tax lawyer's opinion on its bylaws.** None of them depends on a ruling to work.
-- **Congress settles it.** The bank's own law needs Congress anyway, and so does [the bankruptcy amendment](bankruptcy.md). That law also says a locked co-op that meets these rules operates on a cooperative basis, and that its profit shares aren't wages for members paid at least the going rate. That part is a statement of how existing law applies, not a lower tax rate. The same law also makes one real change, open to any employer's workers: it refunds the tax they paid on money they lose when their employer fails ([If the co-op fails](#if-the-co-op-fails)).
+- **Congress settles it.** The bank's own law needs Congress anyway, and so does [the bankruptcy amendment](bankruptcy.md). That law also says a locked co-op that meets these rules operates on a cooperative basis, and that its profit shares aren't wages for members paid at least the going rate. That part is a statement of how existing law applies, not a lower tax rate, though settling the payroll-tax question is worth real money to members ([How this compares](#how-this-compares-with-other-businesses)). The same law also makes one real change, open to any employer's workers: it refunds the tax they paid on money they lose when their employer fails ([If the co-op fails](#if-the-co-op-fails)).
 
 ## How this compares with other businesses
 
-A co-op isn't taxed more lightly than other small businesses, and it isn't taxed much more heavily either:
+A co-op isn't taxed more lightly than other small businesses across the board, or more heavily. It depends on what it's compared with, and on how the payroll-tax question comes out ([above](#payroll-tax-on-profit-shares)).
 
-- **Profit paid to members** is taxed once, at their own rates. Owners of partnerships and S corporations (small corporations taxed like partnerships) are taxed the same way on the profit they take.
-- **Profit the co-op keeps** is taxed at 21% and never again, because nobody can ever take it out. A conventional corporation's kept profit is taxed at 21% and again when it's paid out. A partnership's or S corporation's owners are taxed on it at their own rates, which can be higher or lower, and they own it.
-- **The difference that matters:** a conventional owner's kept profit is still theirs. The co-op's reserve belongs to no one, and it still pays tax. That's a cost of the lock, and this model doesn't ask for a tax break to cover it.
+**Profit paid to members** is taxed once, at their own rates. So is the profit of partnerships, sole owners and S corporations (small corporations whose owners are taxed on the business's profit as if it were their own). But those owners can usually deduct up to 20% of their business profit first ([26 U.S.C. § 199A](https://www.law.cornell.edu/uscode/text/26/199A)), a deduction the 2025 tax law made permanent. Co-op members can't. So:
+
+- **Against a partnership or a sole owner, the co-op comes out ahead, if its payroll-tax position holds.** Those owners pay self-employment tax, about 15%, on their whole profit. If a member's profit share carries no payroll tax, as the model argues, a $9,000 share avoids about $1,270 of it, against a deduction worth $200 to $400 at the rates most members pay.
+- **Against an S corporation, the co-op is somewhat behind.** An S corporation owner who works in the business takes a reasonable salary, which carries payroll tax and gets no deduction, and takes the rest as profit with no payroll tax. That's the closest match to the model's wages-first rule. The difference is the deduction members don't get.
+- **If the IRS wins on payroll tax, the co-op is behind everyone.** Members would pay payroll tax on their profit shares and still get no deduction. For low-paid members, the loss is partly made up: a profit share that counts as earnings earns Social Security credit and Earned Income Tax Credit, which in its lowest range adds 34 to 45 cents for each extra dollar earned by a worker with children. For them, winning the payroll-tax argument isn't clearly better.
+
+**Why members can't take the deduction.** It covers profit from a business the taxpayer carries on themselves (§ 199A(c)(1), (d)). Working as someone's employee isn't one (§ 199A(d)(1)(B); [26 C.F.R. § 1.199A-5(d)](https://www.law.cornell.edu/cfr/text/26/1.199A-5)), and owning a share of a corporation isn't either. Patronage dividends count only when the patron does business with the co-op as part of a business of their own, like a farmer selling grain through a marketing co-op ([§ 199A(c)(3)(B)(ii)](https://www.law.cornell.edu/uscode/text/26/199A); [26 C.F.R. § 1.199A-7](https://www.law.cornell.edu/cfr/text/26/1.199A-7)). A worker-member has no business of their own for the dividend to belong to.
+
+That's the same position the model takes on payroll tax: a profit share is an owner's return on a corporation, not pay and not business income. A member can't have it both ways. Claiming the deduction would mean saying the share is business income, which is the IRS's self-employment theory. So:
+
+- **Members don't claim it.** The co-op's year-end patronage forms report nothing for it, and the tax lawyer's opinion on the bylaws covers it.
+- **Members join only as individuals on the payroll,** not through companies of their own. Setting up as contractors wouldn't work anyway: the rules presume someone doing the same work for a former employer is still an employee (§ 1.199A-5(d)(3)).
+- **The co-op itself can't take it,** because it's a corporation. The only co-ops with a deduction of their own are farm and garden co-ops (§ 199A(g)). The new $400 minimum deduction (§ 199A(i)) doesn't reach members either.
+
+**What it's worth.** In the standard example, members share $360,000 of profit. The deduction on that would be worth roughly $9,000 to $16,000 a year across 40 members. It's close to nothing at the bottom, since it's capped at 20% of taxable income and many low-paid members owe little. In a conventional firm, the same profit would go to one owner, whose deduction would be worth about $23,000 to $25,000 a year, and an S corporation owner can deduct on profit kept in the business too. The gap is mostly federal: most states start from a figure that comes before this deduction.
+
+**The model doesn't ask Congress to extend it.** The deduction is a break for business owners that's worth most to the best-paid. Asking for a share of it would make the pilot a subsidized test. The model does ask Congress to say that profit shares aren't wages for members paid the going rate ([Getting certainty](#getting-certainty)). That isn't nothing: it's worth more than the deduction. It's the same treatment an S corporation owner gets on profit above a reasonable salary, and it's why the going-rate test has to be strict.
+
+**Profit the co-op keeps** is taxed at 21% and never again, because nobody can ever take it out. A conventional corporation's kept profit is taxed at 21% and again when it's paid out. A partnership's or S corporation's owners are taxed on it at their own rates, which can be higher or lower, and they own it.
+
+**The difference that matters:** a conventional owner's kept profit is still theirs. The co-op's reserve belongs to no one, and it still pays tax. That's a cost of the lock, and this model doesn't ask for a tax break to cover it.
 
 ## What this doesn't solve