This bill, titled the "Fair Trusts for Fiscal Responsibility Act," proposes to amend the Internal Revenue Code of 1986 by establishing a new annual tax on the net value of assets held by certain trusts. This new tax, effective for calendar years beginning after December 31, 2026, aims to generate revenue from substantial trust holdings. It applies to "applicable trusts," generally defined as U.S. trusts or those with U.S. beneficiaries or living U.S. grantors, with specific exceptions for charitable, retirement, and certain short-term commercial trusts. The tax is imposed on the net value of all assets of an applicable trust held on the last day of any calendar year, with a graduated rate structure. The rates range from 0 percent for assets below a certain threshold, then increase to 1 percent, 1.5 percent, 2 percent, and finally 3 percent for the highest asset values. These bracket thresholds are initially set at $50 million, $100 million, $250 million, and $1 billion, respectively, and are subject to inflation adjustments. Beneficiaries can elect to allocate their share of these unused bracket amounts to trusts, influencing the effective tax rate. The "net value of all assets" is determined by the fair market value of property reduced by qualified debts. For tradable assets, fair market value is used, while non-tradable assets require a qualified appraisal or a formula based on basis and a long-term rate. The bill includes specific rules to prevent valuation discounts for family-controlled entities and for nonbusiness assets held within entities, ensuring a more comprehensive valuation. Qualified debts exclude those owed to trust contributors, beneficiaries, or related parties. A central feature is the establishment of a "trust withholding credit account" for both trusts and beneficiaries. This account is increased by the trust asset tax paid by the trust and by a ratable share for beneficiaries receiving qualified distributions. The balance in this account is then used to provide credits against generation-skipping transfer (GST) taxes and estate taxes, preventing double taxation. For GST tax, the taxable amount is grossed up by the account balance, and a credit is allowed. Similarly, for estate tax, the decedent's gross estate includes the account balance, and a corresponding credit is provided. The bill also addresses grantor trusts, stipulating that if a deemed owner of an "applicable grantor trust" pays income or trust asset taxes, this payment is treated as a taxable gift, unless the trust reimburses the owner. This provision aims to prevent the use of grantor trusts to avoid gift tax. Furthermore, the bill introduces new information reporting requirements, obligating applicable trusts to file annual statements of net assets and beneficiary interests, and beneficiaries to report their allocated unused bracket amounts to the Secretary of the Treasury.