From The NYT and economist Greg Mankiw, Why Taxing Fairly Means Not Taxing Inheritances:
But there is one thing that everyone can agree on: The estate tax you owe should not depend substantially on the exact moment you happen to expire. A person who died in 2010 paid no estate tax, no matter how wealthy he or she was. A year earlier or later, things would have been very different.
To avoid this particular unfairness, we need more stability in the tax code than we have had in the past. This stability is possible only if those with opposing points of view reach a compromise that, while not perfect from either perspective, is acceptable enough for everyone to live with. Neither Mrs. Clinton’s proposal of 45 percent nor Mr. Trump’s proposal of zero passes this test.
International comparisons are a natural benchmark. Over all, the United States is a low-tax country compared with many of our developed-nation peers. But that is not true when it comes to the estate tax.
Many countries do not tax inheritance at all, including Australia, Canada and Sweden. Most do, but the tax rates are usually much lower than what we impose in the United States. Among the nations in the Organization for Economic Cooperation and Development, the average for the top estate tax rate is 15 percent. The median is only 7 percent, which is the rate in Switzerland.
If the United States were ever to adopt such a low estate tax rate, it would surely put a lot of the estate planning industry out of business. Hiring expensive legal talent may make sense when the rate is 40 or 45 percent, but not when it is 7 or 15 percent. Yet that would be a good thing. The time those lawyers spend helping the rich skirt the estate tax is, from an economic standpoint, pure waste.
Consistency is important. While the estate tax only affects a relative few, it has far greater impact on the decisions that affect investment and economic growth.