You realize that you are stating this:
“If we stop taxing the transfer of property and wealth from one family member to another upon the original owner’s death it will undermine the entire mixed market economy system we currently have and result in an economic system where the status one is born into is the status one will maintain forever, without hope of moving up.”
I disagree. Damnit, I swore to myself I’d stay out of economic threads, but I’ll not attempt to moralize here.
If what you are saying is true, then I wonder why it hasn’t happened already. After all, the estate tax is larger than most, but nowhere near 100%. I feel that, in a given lifetime, even if a person was left with 50% of an estate, then they grew it to 175% (assuming some exponential growth) in their lifetime, left it to their children at a 50% rate, the second generation has almost 100% all over again, or the original amount of money left behind.
In other words, leaving any portion of money and property behind allows the next generation a head-start. So why haven’t we collapsed into aristocracy already?
Well, obviously because not every person can perform equally given similar resources. In other words, not everyone can be rich, even if given the opportunity. Some may maintain it, some may lose it.
This is, admittedly, a little simplistic, but the fear of the rich taking over is a little past its time, I feel. The estate tax is not a crucial hinge on which our economy rests.