Bill Gates Sr. – yes, the father of that other Bill Gates – is co-founder of a group opposing estate-tax repeal and co-author of a book on the subject. Why? Here are some (second-hand, now third-hand for you) excerpts:

repeal rebels claim the estate tax hurts “family farmers.” But Collins pointed out that when curious reporters searched for these alleged victims, not one could be found. In fact, the pro-repeal American Farm Bureau Federation â?? the largest farm organization in the country â?? couldn’t point to a single case of a family farm lost due to the estate tax.

The canard that the estate tax is “double taxation” was also thoroughly debunked by Gates who, when asked about it said, “Well, I’ve been paying taxes on my house in Seattle every year for the past 43 years.”

I’ve said before that estate tax is not double taxation. The inheritor is the only legal entity involved in the transaction (the deceased having just lost any legal status or rights), the estate is income (i.e. money that goes into their pocket) and they haven’t paid tax on it before. The whole “double taxation” issue is kind of bogus anyway. It represents too narrow a focus on a bigger picture that should include many different kinds of taxes, many of which do recur or get passed on. Every dollar that’s not freshly minted by the government (including electronic equivalents) has probably been taxed already at some point, so should it be forever immune from taxation? Of course not. If money changes hands, the tax clock resets. Recurring property and excise taxes really are double taxation. Estate and dividend taxes are not.

I’m a little bit troubled by the implications for buying and selling stock or similar investments, but I don’t think it’s an intractable problem. Whether you tax the entire value or just changes in value (the current system) you’re equally vulnerable to charges of artificially favoring one kind of investment – “buy and hold” vs. short-term speculation – over another. They key is that it’s not really necessary to tax all types of income at the same rate. There’s an aesthetic appeal to it, I’ll admit, but the practical consequences of taxing a stock’s entire value at the wage-income level would be catastrophic. On the other hand, a 3% tax on entire value might make a lot of stock investors happier than a 30% tax on appreciation, while remaining revenue-neutral and philosophically consistent. Yes, I just pulled 3% out of thin air, and I don’t know the real number, but you should get the idea.