Strengthen Social Security by Taxing Dynastic Wealth Act

II 116TH CONGRESS 1ST SESSION S. 1950 To amend the Internal Revenue Code of 1986 to return the estate, gift, and generation skipping transfer tax to 2009 levels, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 25, 2019 Mr. VAN HOLLEN introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to return the estate, gift, and generation skipping transfer tax to 2009 levels, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Strengthen Social Se- 4 curity by Taxing Dynastic Wealth Act’’. 5 SEC. 2. ESTATE AND GIFT TAX RETURNED TO 2009 LEVELS. 6 (a) ESTATE TAX.— 7 (1) RATE SCHEDULE.—The table contained in 8 section 2001(c) of the Internal Revenue Code of 9 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 2 •S 1950 IS 1986 is amended by striking the last row and insert- 1 ing the following: 2 Over $1,000,000 but not over $1,250,000. $345,800, plus 41 percent of the ex- cess of such amount over $1,000,000. Over $1,250,000 but not over $1,500,000. $448,300, plus 43 percent of the ex- cess of such amount over $1,250,000. Over $1,500,000 ............................ $555,800, plus 45 percent of the ex- cess of such amount over $1,500,000. (2) REDUCTION OF BASIC EXCLUSION 3 AMOUNT.—Paragraph (3) of section 2010(c) of the 4 Internal Revenue Code of 1986 is amended to read 5 as follows: 6 ‘‘(3) BASIC EXCLUSION AMOUNT.—For pur- 7 poses of this subsection, the basic exclusion amount 8 is $3,500,000.’’. 9 (b) GIFT TAX.— 10 (1) LIMITATION ON BASIC EXCLUSION AMOUNT 11 FOR PURPOSES OF DETERMINING APPLICABLE 12 CREDIT AMOUNT.—Paragraph (1) of section 2505(a) 13 of the Internal Revenue Code of 1986 is amended by 14 inserting ‘‘(determined as if the basic exclusion 15 amount were $1,000,000 and the deceased spousal 16 unused exclusion amount was modified under sub- 17 section (d))’’ after ‘‘calendar year’’. 18 (2) MODIFICATION OF DECEASED SPOUSAL UN- 19 USED EXCLUSION AMOUNT.—Section 2505 of such 20 Code is amended by adding at the end the following: 21 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 3 •S 1950 IS ‘‘(d) MODIFICATION OF DECEASED SPOUSAL UN- 1 USED EXCLUSION AMOUNT.—In the case of a surviving 2 spouse who is the last spouse of the decedent with respect 3 to whom an election is made under section 2010(c)(5), the 4 deceased spousal unused exclusion amount with respect to 5 such surviving spouse shall be determined as if such 6 amount were the lesser of— 7 ‘‘(1) $1,000,000, and 8 ‘‘(2) applicable exclusion amount of the dece- 9 dent reduced by the amount with respect to which 10 the tentative tax is determined under section 11 2001(b)(1) on the estate of the decedent.’’. 12 (c) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to estates of decedents dying and 14 gifts made after December 31, 2019. 15 SEC. 3. TRANSFER OF ESTATE AND GIFT TAX REVENUE TO 16 COMBINED SOCIAL SECURITY TRUST FUND. 17 (a) IN GENERAL.—Section 201(a) of the Social Secu- 18 rity Act (42 U.S.C. 401(a)) is amended to read as follows: 19 ‘‘(a) There is hereby created on the books of the 20 Treasury of the United States a trust fund to be known 21 as the ‘Social Security Trust Fund’. The Social Security 22 Trust Fund shall consist of the securities held by the Sec- 23 retary of the Treasury for the Federal Old-Age and Sur- 24 vivors Insurance Trust Fund and the Federal Disability 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 4 •S 1950 IS Insurance Trust Fund and the amount standing to the 1 credit of the Federal Old-Age and Survivors Insurance 2 Trust Fund and the Federal Disability Insurance Trust 3 Fund on the books of the Treasury on January 1, 2020, 4 which securities and amount the Secretary of the Treasury 5 is authorized and directed to transfer to the Social Secu- 6 rity Trust Fund, and, in addition, such gifts and bequests 7 as may be made as provided in subsection (i)(1), and such 8 amounts as may be appropriated to, or deposited in, the 9 Social Security Trust Fund as hereinafter provided. There 10 is hereby appropriated to the Social Security Trust Fund 11 for the first fiscal year that begins after January 1, 2020, 12 and for each fiscal year thereafter, out of any moneys in 13 the Treasury not otherwise appropriated, amounts equiva- 14 lent to 100 percent of— 15 ‘‘(1) the taxes imposed by chapter 21 (other 16 than sections 3101(b) and 3111(b)) of the Internal 17 Revenue Code of 1986 with respect to wages (as de- 18 fined in section 3121 of such Code) reported to the 19 Secretary of the Treasury pursuant to subtitle F of 20 the Internal Revenue Code of 1986, as determined 21 by the Secretary of the Treasury by applying the ap- 22 plicable rates of tax under such chapter (other than 23 sections 3101(b) and 3111(b)) to such wages, which 24 wages shall be certified by the Commissioner of So- 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 5 •S 1950 IS cial Security on the basis of the records of wages es- 1 tablished and maintained by such Commissioner in 2 accordance with such reports; 3 ‘‘(2) the taxes imposed by chapter 2 (other than 4 section 1401(b)) of the Internal Revenue Code of 5 1986 with respect to self-employment income (as de- 6 fined in section 1402 of such Code) reported to the 7 Secretary of the Treasury on tax returns under sub- 8 title F of such Code, as determined by the Secretary 9 of the Treasury by applying the applicable rate of 10 tax under such chapter (other than section 1401(b)) 11 to such self-employment income, which self-employ- 12 ment income shall be certified by the Commissioner 13 of Social Security on the basis of the records of self- 14 employment income established and maintained by 15 the Commissioner of Social Security in accordance 16 with such returns; and 17 ‘‘(3) the taxes imposed by subtitle B of the In- 18 ternal Revenue Code of 1986, as determined by the 19 Secretary of the Treasury on the basis of tax returns 20 under subpart C of part II of subchapter A of chap- 21 ter 61 of subtitle F of such Code. 22 The amounts appropriated by paragraphs (1), (2), and (3) 23 shall be transferred from time to time from the general 24 fund in the Treasury to the Social Security Trust Fund, 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 6 •S 1950 IS such amounts to be determined on the basis of estimates 1 by the Secretary of the Treasury of the taxes, specified 2 in such paragraphs, paid to or deposited into the Treas- 3 ury; and proper adjustments shall be made in amounts 4 subsequently transferred to the extent prior estimates 5 were in excess of or were less than the taxes specified in 6 such paragraphs. All amounts transferred to the Social 7 Security Trust Fund under the preceding sentence shall 8 be invested by the Managing Trustee in the same manner 9 and to the same extent as the other assets of the Trust 10 Fund. Notwithstanding the preceding sentence, in any 11 case in which the Secretary of the Treasury determines 12 that the assets of the Trust Fund would otherwise be inad- 13 equate to meet the Trust Fund’s obligations for any 14 month, the Secretary of the Treasury shall transfer to the 15 Trust Fund on the first day of such month the total 16 amount which would have been transferred to the Trust 17 Fund under this section as in effect on October 1, 1990; 18 and the Trust Fund shall pay interest to the general fund 19 on the amount so transferred on the first day of any 20 month at a rate (calculated on a daily basis, and applied 21 against the difference between the amount so transferred 22 on such first day and the amount which would have been 23 transferred to the Trust Fund up to that day under the 24 procedures in effect on January 1, 1983) equal to the rate 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 7 •S 1950 IS earned by the investments of the Trust Fund in the same 1 month under subsection (d).’’. 2 (b) REQUIRED ACTUARIAL ANALYSIS.—Section 3 201(c) of the Social Security Act is amended by striking 4 the fourth sentence in the matter following paragraph (5) 5 and inserting the following: ‘‘Such report shall also include 6 actuarial analysis of the benefit cost with respect to dis- 7 abled beneficiaries and their auxiliaries, to retired bene- 8 ficiaries and their auxiliaries, and to survivor bene- 9 ficiaries.’’. 10 (c) BOARD OF TRUSTEES.— 11 (1) BOARD OF TRUSTEES OF SOCIAL SECURITY 12 TRUST FUND.—Section 201(c) of the Social Security 13 Act, as amended by subsection (b) of this section, is 14 further amended in the matter preceding paragraph 15 (1) by striking ‘‘the Federal Old-Age and Survivors 16 Insurance Trust Fund and the Federal Disability 17 Insurance Trust Fund (hereinafter in this title 18 called the ‘Trust Funds’)’’ and inserting ‘‘the Social 19 Security Trust Fund (in this title referred to as the 20 ‘Trust Fund’)’’. 21 (2) CONTINUITY OF BOARD OF TRUSTEES.— 22 The Board of Trustees of the Social Security Trust 23 Fund created by the amendment made by subsection 24 (a) shall be a continuous body with the Board of 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 8 •S 1950 IS Trustees of the Federal Old-Age and Survivors In- 1 surance Trust Fund and the Federal Disability In- 2 surance Trust Fund in operation prior to the effec- 3 tive date of such amendment. Individuals serving as 4 members of the Board of Trustees of the Federal 5 Old-Age and Survivors Insurance Trust Fund and 6 the Federal Disability Insurance Trust Fund as of 7 the effective date of such amendment shall serve the 8 remainder of their term as members of the Board of 9 Trustees of the Social Security Trust Fund. 10 (d) CONFORMING AMENDMENTS RELATED TO SO- 11 CIAL SECURITY TRUST FUND.— 12 (1) AMENDMENT TO SECTION HEADING.—The 13 section heading for section 201 of the Social Secu- 14 rity Act is amended to read as follows: ‘‘SOCIAL SE- 15 CURITY TRUST FUND’’. 16 (2) BOARD OF TRUSTEES.—Section 201(c) of 17 such Act, as amended by subsections (b) and (c)(1), 18 is further amended— 19 (A) in the matter preceding paragraph (1), 20 by striking ‘‘Board of Trustees of the Trust 21 Funds’’ and inserting ‘‘Board of Trustees of 22 the Trust Fund’’; 23 (B) in paragraph (1), by striking ‘‘Trust 24 Funds’’ and inserting ‘‘Trust Fund’’; 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 9 •S 1950 IS (C) in paragraph (2)— 1 (i) by striking ‘‘Trust Funds’’ and in- 2 serting ‘‘Trust Fund’’; and 3 (ii) by striking ‘‘their’’ and inserting 4 ‘‘its’’; 5 (D) in paragraph (3), by striking ‘‘either 6 of the Trust Funds’’ and inserting ‘‘the Trust 7 Fund’’; 8 (E) in paragraph (5)— 9 (i) by striking ‘‘managing the Trust 10 Funds’’ and inserting ‘‘managing the 11 Trust Fund’’; and 12 (ii) by striking ‘‘Trust Funds are’’ 13 and inserting ‘‘Trust Fund is’’; 14 (F) in the matter following paragraph (5), 15 by striking ‘‘Trust Funds’’ each place it ap- 16 pears and inserting ‘‘Trust Fund’’; and 17 (G) in the second sentence in the matter 18 following paragraph (5), by striking ‘‘whether 19 the Federal Old-Age and Survivors Insurance 20 Trust Fund and the Federal Disability Insur- 21 ance Trust Fund, individually and collectively, 22 are’’ and inserting ‘‘whether the Social Security 23 Trust Fund is’’. 24 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 10 •S 1950 IS (3) INVESTMENTS.—Section 201 of such Act is 1 amended in subsections (d) and (e) by striking 2 ‘‘Trust Funds’’ each place it appears and inserting 3 ‘‘Trust Fund’’. 4 (4) CREDITING OF INTEREST AND PROCEEDS 5 TO TRUST FUNDS.—Section 201(f) of such Act is 6 amended— 7 (A) by striking ‘‘the Federal Old-Age and 8 Survivors Insurance Trust Fund and the Fed- 9 eral Disability Insurance Trust Fund shall be 10 credited to and form a part of the Federal Old- 11 Age and Survivors Insurance Trust Fund and 12 the Disability Insurance Trust Fund, respec- 13 tively’’ and inserting ‘‘the Social Security Trust 14 Fund shall be credited to and form a part of 15 the Social Security Trust Fund’’; 16 (B) by striking ‘‘either of the Trust 17 Funds’’ and inserting ‘‘the Trust Fund’’; and 18 (C) by striking ‘‘such Trust Fund’’ and in- 19 serting ‘‘the Trust Fund’’. 20 (5) ADMINISTRATIVE COSTS.—Section 201(g) of 21 such Act is amended— 22 (A) in paragraph (1)— 23 (i) in subparagraph (A), by striking 24 ‘‘Of the amounts authorized to be made 25 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 11 •S 1950 IS available out of the Federal Old-Age and 1 Survivors Insurance Trust Fund and the 2 Federal Disability Insurance Trust Fund 3 under the preceding sentence’’ and all that 4 follows through ‘‘(Public Law 103–296).’’; 5 (ii) in subparagraph (B)(i)— 6 (I) by striking subclauses (II) 7 and (III) and inserting the following: 8 ‘‘(II) the portion of such costs which 9 should have been borne by the Social Security 10 Trust Fund,’’; and 11 (II) by redesignating subclauses 12 (IV) and (V) as subclauses (III) and 13 (IV); 14 (B) in paragraph (2)— 15 (i) by striking ‘‘Trust Funds’’ and in- 16 serting ‘‘Trust Fund’’; and 17 (ii) by striking the last sentence; and 18 (C) in paragraph (4), by striking ‘‘Trust 19 Funds’’ each place it appears and inserting 20 ‘‘Trust Fund’’. 21 (6) BENEFIT PAYMENTS.—Section 201(h) of 22 such Act is amended to read as follows: 23 VerDate Sep 11 2014 22:47 Jun 27, 2019 Jkt 034408 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1950.IS S1950 pbinns on DSK79D2C42PROD with BILLS 12 •S 1950 IS ‘‘(h) All benefit payments required to be made under 1 this title shall be made only from the Social Security Trust 2 Fund.’’. 3 (7) GIFTS.—Section 201(i) of such Act is 4 amende [Text truncated for display. 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