[cjy]

It seems there are two issues here: a moral one and a pragmatic one. [edit grammar]

1. Moral Issue: Does society have some claim to the wealth that is created by the most successful members of that society? This is a complicated issue. When we are talking about natural monopolies due to network externalities I might agree with this. Mark Zuckerberg hasn't created billions of dollars of value. Facebook is valuable because everyone uses it. Zuckerberg just created a marginally better website marginally quicker than the next guy.

However, it is inane to say that "every fortune depends as much on society as it does on the individual." That's selling creators short. There is a scarcity of people who create things; people with vision who can make that vision a reality. People who create great things should have a right to the fruits of their labor. They should have a right to share those fruits with their loved ones.

2. Practical Issue: We want to put the incentives in place to encourage people to create wealth and produce things. You argue that wealth inequalities distort economic incentives, but I think the arguments for that are pretty questionable. See my post on guard labor. http://aspiringeconomist.com/index.php/2010/02/04/guard-labo...

Taxes are bad because they distort people’s behavior. We want to raise revenue for society by taxing people who won't change their behavior in response to taxes. See Ramsey Optimal taxes. So the question is: are estate taxes a good way to tax people without discouraging them from working as much? It's an empirical question I don't know the answer to. I do know that the estate tax encourages people to spend lot of time and resources trying to get out of paying taxes (trusts, offshore accounts, consulting lawyers). That is definitely a waste.