Let's say you are running a small family manufacturing business. You start it from nothing, by the time you die, it's worth $4 million. Fact is, a lot of the $4 million of value which was built has never been taxed. This is because the value of the business is not just the original historic cost of the physical assets owned, or cash in the bank. Businesses often have a value far beyond what the Balance Sheet shows. One, they are a going concern that makes money, and they have an established customer base. Two, they often buy assets such as land or buildings that appreciate in value. If these gains aren't taxed at death, when the property is transferred to heirs, it would NEVER be taxed - which death tax advocates would say is not fair. Also, bear in mind that the first $2,000,000 of value transferred to heirs is NOT subject to the death tax (the amount exempt changes from year to year). So this is a tax that affects only a small minority of the people who die in the US every year.