S. 4196 — Strengthen Social Security by Taxing Dynastic Wealth Act

This section revises estate and gift tax rules by (1) amending the estate tax rate schedule in IRC §2001(c) to impose rates of 41% on amounts over $1 million (up to $1.25 million), 43% on amounts over $1.25 million (up to $1.5 million), and 45% on amounts over $1.5 million; (2) reducing the estate tax basic exclusion amount to $3.5 million (from $5 million) under IRC §2010(c)(3); and (3) limiting the gift tax basic exclusion amount to $1 million (from the estate tax amount) under IRC §2505(a), with a corresponding cap of $1 million on the deceased spousal unused exclusion amount, effective for estates of decedents dying and gifts made after December 31, 2026.

This section establishes a single Social Security Trust Fund effective January 1, 2027, by directing the Secretary of the Treasury to transfer all securities and balances from the existing Federal Old-Age and Survivors Insurance Trust Fund (which finances retirement and survivors benefits) and Federal Disability Insurance Trust Fund (which finances disability benefits). (As background, the two existing trust funds are currently financed by the Old-Age, Survivors, and Disability Insurance portions of payroll and self-employment taxes.) The section further appropriates to the new combined fund, for the first fiscal year after January 1, 2027, and annually thereafter, amounts equivalent to 100% of (1) specified payroll taxes, (2) specified self-employment taxes, and (3) estate and gift taxes under subtitle B of the Internal Revenue Code (previously deposited in the general fund); requires transfers from the general fund based on Treasury estimates with subsequent adjustments; and authorizes the Secretary to transfer additional amounts if needed to meet monthly obligations, with interest charged to the trust fund. This section also (1) requires the annual Board of Trustees report to include actuarial analysis of benefit costs for disabled beneficiaries and auxiliaries, retired beneficiaries and auxiliaries, and survivor beneficiaries; and (2) provides for continuity of the Board of Trustees of the new fund with the boards of the prior funds.