One of the great myth's floating about is that we are going to reduce the tax on Estates by making Bush's Estate Tax cut permanent. While it all sounds good in reality his proposal would do little to increase the value of few estates and would actually reduce the value of many. To understand this we have to apply the question of reveune neutrality.
Revenue neutrality means that any change in the method of taxation does not reduce the revenue required. In short any loss of tax revenues must be offset elsewhere. If the government does not need the money then taxes could be cut elsewhere. Therefore rescinding the Estate Tax would simply transfer burden.
Here is where the problem starts. Taxes reduce estates. One dollar paid in taxes can reduce future estates by 1-20 dollars depend on age and life expectancy. Now assume all estates were taxed. Given the choice between pay now and pay after we are dead most would say "come back when I'm dead and you can take my dollar then, if I forget to spend it." However, since not all estates are taxed we are simply transferring the tax burden from one group to another. In this case we are simply cutting taxes for the wealthy heirs and transferring the burden to those less fortunate.
While there are good reason pro and con on this issue we need to understand the acutal implications.