Analytical,

If the tax were 1 cent an just one person, it would be too much.
That a person can amass wealth is one of the things that encourages a man to amass wealth. The people who amass wealth are the ones who hire other people, so that they can also amass wealth.
There is no claim on that wealth that any person or group of persons can make to that wealth that should be given a bit of credence, save if the person who had the wealth contracted with another for goods or services, or when the person voluntarily gives some or all of the wealth to another person.
In short, taxes for the express purpose of wealth redistribution are unjust in that they seek to lay claim to someone else's stuff.
They are counter-productive because they hamper those who can hire from doing so because they have lost some of their wealth through the tax.
They are counter-productive because they punish productivity.
They are counter-productive because they reward sloth and fraud.
Now, you know how I hate to admit that there would be anything in the NT with which I might agree, but 2 Thes. 3, especially vs. 10, shows that the one who will not work, let him not eat.

The problem I have with efforts to get rid of the inheritance tax are two words called DEFICIT and DEBT that are attached to FEDERAL GOVERNMENT.

The fact is, the FG is going to spend money on lots of stuff.  They have to get it from somewhere.  Inheritance tax is one tax that comes from gains that are not earned where someone truly receives a windfall.  From what I understand, it's a significant amount of money.  So, what tax are we going to replace it with, because either that's going to happen or we're going to get more DEBT, which will create more INTEREST, which will require further revenues to pay off.

First, I should say that I am an estate planning lawyer, and estate tax planning is a large part of my daily work life.  

A couple of random thoughts...

We do not tax inheritances in this country (at least not at the federal level).  We tax "estates," which means the tax is on the amount owned at death, not on the amount received by the heirs.  Although it's a subtle distinction, it has enormous impact on policy and practice.

A couple of people have mentioned the planning techniques that rich people can use to reduce their estate taxes.  That's true, but let's not pretend that the techniques are just loopholes sitting around waiting for someone to say the magic word.  There are really only four things you can do with your assets from an estate planning perspective.  (1) give them to your heirs during your lifetime; (2) sell them to your heirs during your lifetime; (3) give them to charity; or (4) give them to your heirs through your estate.

Giving assets away is a good technique, but large gifts (at once or over a lifetime) incur a tax just as if they were passed through the estate.

Sales have to be above-board, (i.e. for full market value) or they, too, will incur a tax.

In large part, then, the techniques for reducing estate taxes involve giving large amounts to charity.

So, when you look around at the privately-funded colleges, museums, homeless shelters, and so forth, remember that you are seeing the end-product of rich people reducing their estate taxes.  In fact, many charities are in an uproar over the proposed elimination of the death tax, because they fear it will hurt their income.  Of course, the charities don't have the benefit of sitting with the donors, as I do, and seeing that for about 80 percent of them, the primary motivation is philanthropy, not estate tax reduction.

Regarding the larger moral question of whether the estate tax is good or bad, I'll not comment now -- mainly because I see that you all have done a very good job of presenting the arguments, and I would just be redundant.

In general I assume that family members are not left with a pitance when philanthropy is a large part of the planing. It would be interesting to have you share an estimate of the average size of an estate where over $500,000 is used for philanthropy.

It's hard to set any hard and fast rules.  In my last post, I left off using life insurance as a wealth replacement tool.  (i.e. buying life insurance to replace the death taxes.)

Most people tend to use insurance up to double the amount of the estate tax exemption.  For example, right now estates in excess of $6 million start to fall into the sweet spot for charitable planning.  That's just a rule of thumb, though.

The amount of the charitable donation is essentially equal to the estate tax that would be paid.  The calculations involve more complex time value of money issues, but it basically works out to be dollar-for-dollar shifting of tax to charity.

A lot, of course, depends on the charitable inclinations of the client, but I'd say generally that anyone with an estate in excess of $7.5 million is going to end up giving $500,000 to charity in one way or another.

By way of example, Sam Walton (actually his widow) has set aside so much money for charity that when his widow passes away, Arkansas is going to experience a cultural and scientific revolution like we've never seen.  The Bill and Melinda Gates Foundation is another example of this, although they also demonstrate the philanthropic tendencies of the wealthy, as they have given far more to charity than their estates will ever require merely as tax planning.