Should we have an estate tax?

Yes I know all about our current fiscal mess and the need to restore balance.  But ideally, under a well-crafted tax system and a responsible administration, should there be an estate tax?

My best guess is no, and for a simple reason.   When an estate is inherited, there are two beneficiaries.  First, someone receives the estate.  Second, someone wanted to pass along that estate, often to his or her children.

Death is tragic, but nonetheless a double benefit is created from the inheritance.  And a double benefit is diminished by the tax.

Now we might, like Steven Landsburg, decide that the "preferences of the dead" (in that case, Terri Schiavo) should not count for anything.  I reject that view, if only because the power of anticipation is so powerful.  That is, we like the idea of leaving bequests to our loved ones.  Respecting the preferences of the dead is one way to make the living happier.

Yes this sounds like craven apologetics for the rich.  But if you wish to tax the wealthy, tax their consumption, not their bequests and gifts. 

The best remaining case for an estate tax is if American politics will not otherwise support the requisite degree of "soaking the rich" at the consumption level.  But I worry about this kind of argument.  I prefer to reserve my public support for cleaning up previous messes rather than creating new ones.  And for those MR readers who consider yourself "left wing," it will do your cause no favor to convince the American people you want to tax the rich more no matter what.  Indeed it is the backlash against the sometimes-elitism of the left that has led to the very situation (i.e., Bush) where the estate tax might be repealed.  That is a development I would not have predicted fifteen years ago.

Addendum: One argument for an estate tax suggests that it is worthwhile to tax bequests, so as to encourage donations to non-profits.  To the extent this argument works, the estate tax is no longer a revenue-raiser.  Or read Mark Kleiman on the dangers of an inherited plutocracy, though this does not worry me.

By the way, here is Jane Galt's proposal for estate taxation, and here is Jane on taxation more generally.