Sure. But also eliminate the step-up in basis at death. (My own view is that the best estate tax would be one with a very low exemption -- say, $100,000 -- but also a tax rate so low that people would not go to a lot of trouble to avoid it. I suspect that a 15% rate with a $100,000 exemption would both generate more revenue and redirect estate planners and lawyers to more productive work.)
I think he might be right, especially if you also include that elimination of step up in basis for purposes of calculating capital gains. I googled around and couldn't find stats on average estates at death, but I doubt it's $100,000 (especially including people with no net estate). Even someone with $200,000 would only be effectively taxed at 7.5%. The current rate is 35% and exempts the first $3.5 million. (UPDATE: actually the exemption is $5 million through 2012. It's then caught up in the Bush tax cut issue - unclear what will happen post 2012.)
Tigerhawk misses that his own proposal might even be more progressive than the current system, assuming it does bring in more money. Most of the money would come from people with estates well over $200k, maybe over $500k. These people are far wealthier than the average American. The obvious downside is while it may be more progressive overall, it catches the moderately wealthy at the expense of giving a huge windfall to the superwealthy.
So of course it's not the ideal estate tax system, which would exempt $50k, start at a rate of 15% and gradually ratchet up to 60-90% at $5m (depending on how effective evasion is), but maybe it's worth considering.
UPDATE: See L's comment below, that an on-paper capital loss from the immediate sale of estate capital items (and due to step up, there should always be a capital loss) can be set against an inheritor's capital gains. You get free money and a tax break on your own taxes. I'd like to get that verified, but it seems plausible and amazing.
