[jpetso]

This angle makes me think that we're going about the whole inheritance tax thing the wrong way.

It's not the parent's estate that should be taxed. They have indeed earned all the money fair and square, and should be able to pass it on as they see fit.

Instead, let's think about a tax on receiving inheritances. Limiting the money hose where the inequality actually happens, at the person that hasn't worked for the money and through pure happenstance comes into riches while others are not getting remotely equal opportunities. That person should be the one to consider when proposing an inheritance tax.

Maybe a lifetime tax-free limit on receiving inheritances, cumulatively, from any source.

[Edit: This way, we can also elegantly solve the "can't pass down the family business" problem: Allow the inheritance tax to be paid in long-term installments by the recipient, with interest, allowing the inheriting child to keep the asset but make them work for part of the value they got out of it. Remaining tax debt at the time of the child's death would be due immediately at the time of their own death.]

[jemmyw]

Just treat it like income. Doesn't matter when your parents gifted you the money, before or after they died, it's income received.