As president in 2000, Bill Clinton vetoed a proposal to repeal the estate tax, though he backed less significant changes to cushion family-owned businesses and farms against the potential effects of the tax.
‘Solve Them’
“If you’re serious about wanting to deal with the problems that estate tax presents, let’s get after it and solve them,” he said on Aug. 31, 2000. “But we have to proceed on grounds of fiscal responsibility and fairness.”
His successor, George W. Bush, signed a law that narrowed the estate tax and eliminated it for 2010 only. That law was set to expire on Dec. 31, 2010. Unless Congress acted, the rate was scheduled to rise and the exemption was scheduled to drop.
At the end of 2010, Congress set the lifetime exemption from the gift tax for each individual at $5 million, up from $1 million. Lawmakers also unified that exemption with the estate tax, so that gifts made while alive counted toward the estate- tax exemption at death.
Those rules were scheduled to expire at the end of 2012, offering what looked like a one-time chance to use up the exemption with gifts -- even if tax policy later swung in the other direction.
Into Trusts
In 2011 and 2012, many high-net-worth families moved money out of estates and into trusts to take advantage of the more favorable rules.
U.S. taxpayers reported making $122 billion in nontaxable gifts on the returns they filed in 2012, more than four times the amount in each of the two previous years, according to the Internal Revenue Service.
In January 2013, Congress removed the expiration date from the higher exemption and kept indexing it for inflation. It is now $5.34 million per person and $10.68 million per married couple. Just 3,700 estates will owe estate taxes this year, equaling 0.14 percent of people who will die, according to estimates by the Tax Policy Center, a nonpartisan research group in Washington.