Glenn Reynolds speculates about declining political support for the death tax:
I think that one difference may be that society does less to “make it possible” for people to get wealthy now. A hundred years ago, or even fifty, the politics of inheritance taxes were different. But then the government mostly defended the country and engaged in various public-good activities, like building roads or supporting research. There was pork, and income transfer, of course, but it was a much smaller part of the picture. So the notion that one was “giving back” to a system that made wealth possible made some sense.
He’s right, but it’s worse than that. Modern government not only transfers wealth on a grand scale from one group to another, it seeks to make the accumulation of wealth much more difficult in the first place. A quick calculation of how many marginal dollars one has to earn in 2005 vs. 1900 to accumulate an additional dollar of after-tax estate value makes clear how much harder it is now. (And that calculation considers only explicit taxes, not the many regulatory and legal costs — licensing, zoning, environmental regulations, safety regulations, EEOC regulations, lawsuits, etc. — that didn’t exist in the past.) From the perspective of many people who are actually trying to create wealth, government is the enemy. The way to make things better for everyone is to reduce disincentives to wealth creation, not to punish further those who are successful enough to run the government’s gantlet.
Leftists who write things like “fuck the small businessman” would do well to ask themselves where our society’s wealth comes from. It comes largely from productivity gains based on capital investment. Inheritance is traditionally an important source of such capital. Taxing inheritance reduces the capital stock, because government won’t invest it as effectively as family will, and because productive people have less reason to work hard, save and invest when they can’t share their wealth with their heirs. It’s also wrong to confiscate people’s property.