Liberals believe that the person who dies is not being taxed as they are dead. They believe that the heirs are being taxed for the unearned value they received from the estate. To a large degree, they have a point as to who is being taxed. The question is: does the heir actually receive any taxable value from the simple receipt of the estate.
Conservatives believe that the value of an estate is the "after-tax" savings of a life of work. Therefore the tax on that income has already been taken by the government and they have no remaining claim to the assets of the estate. Again, the estate is not being taxed, the heirs are. The question still remains: does the heir actually receive any taxable value from the simple receipt of the estate.
Here is the conservative argument. The heirs, more often than not, have not YET had a taxable event. If the estate passed along cash you could say there was a taxable event. However, most people with an estate large enough to incur an estate tax rarely pass along cash. The assets are typically in stocks, bonds, real estate or business assets. In order for the heir to unlock any value from those assets, they would have to be sold. That should be the taxable event.
As it is, the Estate Tax forces assets to be sold or liquidated to pay the tax. This is because the asset does not typically hold enough cash or working capital to pay the tax. The easiest example to explain is the large family farm which has hundreds of acres of land, barns, and equipment. More times than not this farm has a great asset value, but is cash poor due to cost of operation and variable nature of cash flow and the time it is received. The Estate Tax would force the sale of the farm and is a prime culprit in the death of family farms.
Another example is the small to medium size business that has plant and equipment worth $10mm to $20mm, but only enough "cash" to run the operation. It must be sold to unlock the resulting cash to pay the tax.
On a larger scale, imagine the son or daughter who inherits the stock of the Father who was CEO of a Fortune 500 company. If the stock pays dividends, you have a taxable event. If the children sell their stock, there is a taxable event. Until that time, the heirs may have inherited a fortune, but they have not realized any value from it. To tax them for something they have not received should be a crime. That is the effect of the estate tax. And it should be outlawed.
Interesting RE the “taxable event” angle.
I will provide a real-life example.
My father is an artist, and a rather good one. Although, he is retired, and managing his estate plans, as it were.
Recently, a good friend of his passed on - also an artist, somewhat advanced in age.
The IRS went into the friend’s studio, valued all of his unsold paintings at retail, and immediately siezed his widow’s house for the estate taxes. Put her right out on the street.
Government, as you know, is here to help.
So a short time later, I visit my Dad’s studio - “Hey, Dad, you must be having a great year - all of the unsold paintings are gone!”
“I burned them. Didn’t want your mother to lose the house.”