A new entrant to Democrats’ tax-the-rich set of proposals is one that would impose new tax liability on trusts with assets in excess of $50 million. The Fair Trusts for Fiscal Responsibility Act of 2026 was introduced on May 4 by Sens. Patty Murray (D-WA), Ron Wyden (D-OR), Chris Van Hollen (D-MD), Cory Booker (D-NJ), and Angela Alsobrooks (D-MD).

The Senators say trusts are often “loopholes” in the tax code that allow the wealthiest Americans to avoid paying taxes. “Firefighters and nurses don’t get to hide their money in a trust fund and skip out on paying their taxes—billionaires shouldn’t get to either,” said Sen. Murray when she announced the bill’s introduction. Sen. Murray also pointed out that there are an estimated hundreds of billions of dollars held in generation-skipping transfer tax exempt trusts. It is this type of trust that is the target of the bill—some charitable and other kinds of trusts not used in estate planning would be exempt from the new taxes the bill would impose.

The bill would impose a one percent tax rate on trust assets between $50 million and $100 million. There would be a 1.5 percent tax on assets valued at between $100 million and $250 million; a two percent tax on assets between $250 million and $1 billion, and a three percent tax on assets above $1 billion. The bill also includes reporting requirements and noncompliance penalties.

Prospects: There is little chance that Republicans, who now control the House, Senate and White House, will consider most of the Democrats’ tax-the-rich proposals this year. This is true for this bill, which focuses on generation-skipping trusts. However, depending on the urgency of a need for revenue, a tax on trusts has a slightly better chance than a new tax on people or businesses.

Further, this bill (and other tax-the rich proposals that would impose new tax liability on ultra wealthy taxpayers) will almost certainly be in the mix for a tax bill if/when Democrats win control of any of the levers of government. That could happen next year.

Currently, the House appears to be in play for Democratic takeover after the November mid-term elections. There is also an outside chance that the Senate will flip to Democratic control. President Trump will remain in the White House and could veto this (or any other tax-the-rich) bill, but he has shown signs of a populist streak and so depending on the amount of revenue the bill would raise, and what that revenue would be used for, there is some possibility(albeit a small one) that this new tax on large trusts used in estate planning contexts could escape the President’s veto pen. Consequently, this bill bears a close watch.

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org