Actually, with the Estate Tax, with the proper estate planning (financial and legal), it is very possible to eliminate and / or negate the effect of much of this taxation. People need to be pro-active ahead of time. It involves working with an attorney (one who specializes in estate planning) and a financial advisor. My father and I help our clients with just this kind of thing.
We do these slides in our seminars that kind of make me want to roll my eyes because I think everyone who does what we do uses these slides, but we quickly review the amount of money lost to estate taxes and costs of some famous people.
Some people who DID NOT plan include:
Marilyn Monroe, who lost 55% of her $820,000 estate
Elvis Presley, who lost 73% of his $10,000,000 estate
Ogden Mills (secretary of the Treasury!), who lost 60% of his $9,500,000 estate
Some people who DID plan include:
William R. Hearst, who lost only 6% of his $57,000,000 estate
John Rockerfeller, Sr., who lost only 3% of his $550,000,000 estate
William Danforth (Ralston Purina), who lost only 2% of his $5,800,000 estate
In fact, Judge Learned Hand (US Appeals Court) is quoted as saying "There are two systems of taxation in this country, one for the informed and one for the uninformed.â€ You can look into Internal Revenue Code sections 170 and 664 -- or better yet, talk to an estate planner as this isn't something you can put into place without professional help.
Throughout the US history, the estate tax has been repealed a number of times, and always re-instated in a period of War (which is the current condition really!). Additionally, the concept behind the estate tax is that it is a way to level out the wealth of the nation, by forcing those who have been successful to share with those who have not been as successful. But, again, there are ways around it that are legal and used by the informed.
Not only that, but I believe that tied to the possible repeal of the Estate Tax is the elimination of being able to use a stepped up basis. This is where, when you inherit an asset (real estate, stock, whatever), you are able to use as the cost basis the value of the asset on the date of death -- not the actual cost basis of it when it was aquired by the person who passed away. If you think about it, since estate taxes only kick in on "large" estates, this loss of the stepped up basis effects far more people than the estate tax ever will.