The American Stability Act, Explained

Billionaires don’t pay taxes. Working-class people do. CEOs make millions. Their full-time employees can’t support themselves. When the bipartisan majority of Americans say the economy is “rigged,” this is what they are talking about. 

The U.S. economy is rigged to benefit the wealthy at the expense of the working class and it’s a threat to our country and our democracy. 

It’s time for bold solutions. The Patriotic Millionaires are proud to join Pennsylvania Representative Summer Lee in introducing the American Stability Act. The American Stability Act will do 3 major things:

• ELIMINATES FEDERAL TAXES for any taxpayer making less than the median cost of living for a single adult with no children (slightly above $40,000 a year);
• SHIFTS the responsibility for these revenues onto taxpayers making more than $1 million a year by implementing a 3% surtax on annual incomes over $1,000,000 and an 8% surtax on annual incomes over $15 million;
• REPLACES the minimum wage with a new “Stability Wage,” which is set to the median cost of living in the US for a single adult with no children (currently approx. $41,600/$20.00 per hour), and then indexes it to inflation or the increase in the median wage for all workers (whichever is higher).

Download a detailed explanation of the American Stability Act here.

The Problem

The challenges we face are not particularly difficult to understand, or to fix. Since the mid-1970’s, productivity and worker compensation have become decoupled. The benefits of the economy increasingly flow to the top 1% (and even more to the top .01%) while wages for workers remain persistently flat. Today, more than 40% of working Americans make less than the median cost of living for a single adult with no children. More than 70% of Americans make less than the median cost of living for a single adult with one child. The bottom has fallen out of the wage floor, leaving middle class workers nothing to stand on. And the tax system is awash with unmerited giveaways to the rich.

As it is currently constructed, our economy will guarantee that we become even more unequal ever more quickly over time. An increasingly global economy and the emergence of AI and other technologies virtually guarantees that this problematic trajectory will sink the nation if we let it.

What’s in the American Stability Act?

The legislation combines tax and wage reforms into a single bill that establishes a more sustainable relationship between labor and capital and permanently insulates American workers against disruptions caused by globalization, AI and other technological advances in the years to come.

First, it calls for a federal minimum wage, the Stability Wage, that initially is a Cost of Living Wage – a wage sufficient to pay the basic living expenses of a single, childless adult living in the median American state.

Further, the American Stability Act calls for the Stability Wage to increase in proportion to the increase in the average wage for all workers, as the minimum wage did prior to 1968, but never to be less than the inflation-adjusted Cost of Living Wage. According to the Living Wage Calculator, of the 50 states and Washington, DC, North Carolina is the median state, with a $44,848 average annual cost of living for a single person, including taxes. Under our proposal, which would eliminate federal income tax for those making up to the Cost of Living Wage, the cost of living would be $41,450, or $19.93 per hour based on a 40 hour work week. Thus, the American Stability Act establishes the Cost of Living Wage – and the initial Stability Wage – at $20 an hour.

Second, the American Stability Act provides for an exemption from federal income tax – the Cost of Living Exemption – for incomes up to the Cost of Living Wage. The tax reduction from the Cost of Living Exemption will be gradually reduced for those with incomes greater than the Cost of Living Wage, but those with incomes up to 200 percent of the Cost of Living Wage will see some benefit.

Third, it links tax bracket adjustments to future increases in the Stability Wage, so that all Americans share in the benefits of improved economic productivity. As the Stability Wage increases, the tax bracket thresholds will as well, thus decreasing income tax burdens for everyone. All Americans, from low wage workers to the ultra-rich, will prosper together.

Fourth, it imposes a three percent surtax on incomes above $1 million, with an additional five percent on incomes above $15 million, thereby shifting the responsibility for income tax which currently impairs the ability of working Americans to pay basic living expenses to those most able to pay, and restoring a part of the tax progressivity that has been lost to over four decades of tax cut packages favoring the wealthy.

Who supports the American Stability Act?

The American Stability Act has been endorsed by Americans for Democratic Action, Center for Popular Democracy Action, Excessive Wealth Disorder Institute, Institute for Policy Studies Inequality Program, NETWORK Lobby for Catholic Social Justice, One Fair Wage, Patriotic Millionaires, Progressive Democrats of America, Public Citizen, Responsible Wealth, Social Security Works, Strong Economy for All Coalition, Take on Wall Street, United for a Fair Economy, United for Respect, and National Black Worker Center.


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