Originally Posted by NW Ponderer
Having laid that out in detail, let me get to the other points. I'm going to take them in reverse order: You claim, "The money that is taxed by Unified Gift and Estate Tax has already been taxed!" Almost entirely untrue. I have addressed this issue at length in numerous posts, but the short answer is, that taxes are only imposed upon a "taxable event". (This was my area of practice for most of my career.) In most Estate and Gift Tax scenarios, that "taxable event" has never happened. As an example: Parents buy a house for $30,000.00. 30 years later, they die. The $350,000 house passes to their son. That $320,000 "gain" has never been taxed. The same would be true for a 401(k), an IRA, and most capital assets, such as stocks or bonds. In short, it's just not true. That is why I favor treating Estate and Gift transfers just like any other income - as it is always income to the recipient.
In-Come: a combination of two words representing money or other assets being received.

In-come tax: one method of raising funding for the operations of the government.

Two comments on this. First, you explained the gain on an asset as a taxable event, but you didn’t as strongly make the point that the transfer of assets is a taxable event in itself. The “double taxation” notion forgets that the dead person is not the one paying estate taxes, it is the new owner of the dough who is getting income. A transaction takes place that isn’t so different than receiving a paycheck, except that the recipient didn’t trade work for the income.

That leads to comment #2 - I think it is so incredibly strange that people unquestioningly accept that income from working, which is a matter of trading chunks of one’s life for money, is okay to be taxed, but that income from windfalls (including inheritance) and gains from investments (where the capital, or luck does the work) should be exempted. Shouldn’t it be the other way around?

You never change things by fighting the existing reality.
To change something, build a new model that makes the old model obsolete.
R. Buckminster Fuller