The step up in basis is not really related to inheritance tax. Suppose you inherit the house and
don't sell it. Then you're not getting any kind of tax break because you're not getting any money -- maybe there will be another housing crash in ten years and you'll lose the value, and right now you're just living in the house. But if you impose inheritance tax then there is a new tax that wouldn't be due if you were just doing what your parents were doing and
not selling the house. You don't want to force people to sell their home in order to pay the tax on it.
Meanwhile the reason for the step up in basis is that the alternative would make the property inalienable, because after several decades the majority of the value of the property is "gain" and then you never want to sell it because you'll lose so much value to tax. It makes it so people can't move even if it would be more efficient because the after-tax sale price isn't enough to buy a similar house somewhere else.
And all the basis reset is really doing in most cases is accounting for inflation. If your parents bought an asset for $100k in 1950, its nominal value would now be over a million dollars even if its real value is still exactly the same, but then the government wants to claim that 90% of the value is taxable income. Indexing the basis to inflation would fix this, but then the basis reset would be irrelevant or inconsequential in the large majority of cases and could still be justified as not costing very much at that point and being a convenience because you don't have to track down the original purchase price of an asset that has been in your family for decades.