Do you think inheritance tax eventually captures a lot of this passive income?
If I was a politician I would leave it alone and let states deal with it. I think most people that are against the "death tax" know it won't affect them but it's the idea that income that was taxed is now being taxed again. The emotional appeal of leaving a better life for those you love, etc.
So, I'd get rid of it. It's insignificant. It accounts for about .5% of total Federal revenue. Easy sacrifice.
Keep the "death" tax, and here's the thing. Due to death, the assets changed hands. That money wasn't yours. It was your parent's money, so this is the first time that you are acknowledging the income. You personally won't get taxed on it again. Same with dividends and other stock related taxes No recognized income from you personally until you get the money. That's when you get taxed, pure and simple.
> If the customer already paid taxes on it when they bought it, why business required to pay taxes on it [that income] again? It's double taxation, and it's utterly unfair.
Double taxation arguments are like mad libs you can pick any two parties in a taxed transaction and make the same argument. Pretty much every other kind of transaction is taxed. Yet the other places we tax, income and sales, generate healthy economic activity (labor, wealth, and consumption). Unlike inheritance which has little more than net 0 impact on the economy.