The problem with inheritance tax is that it leads to a substantial amount of inefficient, uneconomic activity as rich folk try to mitigate it.
Here in UK, if you have a large plot of land, you could:
a) rent it out and let someone do something useful with it, or
b) stick 1 sheep on it and claim agricultural relief.
Option a) would have to turn in a profit equating to approx 100% of the value of the land in order to approximately break even with the 1 sheep.
Why? Let's assume the plot of land is worth about $100. The net cash position with option
a) $100 profit less ~50% income taxes = $50 banked, plus $100 worth of land, total asset values $150. Deduct 40% Death Tax, kids left with $90.
b) $100 land, no IHT due to agricultural property relief, kids are left with $100.
Similarly, say John the entrepreneur built up a great trade, but now his heath isn't so great and he's kinda run out of steam. The business is floundering, it isn't turning a profit, each year a few more staff are let go, everyone is demoralised and it's basically crap. Another entrepreneur, James, eyes up the business, has some great ideas and the ability to pull them off. He's really on the ball and has business lined up already, very comfortable he could turn it around and grow at least 10% per year. He puts in an offer of $1m.
If John sells, he'll pay 28% capital gains tax now and 40% death tax on what's left when he dies. Net cash position £432k to his son.
If he does not sell, passing the business to his son will fall under business property relief so he'll hand over the whole business. If the son later sells he'll pay the 28% capital gains tax, so he will come out ahead provided he can sell for more than 600k.
Obviously the examples are highly over simplified, there's other things that can be done to mitigate etc, but you can see how it easily poorly thought out taxation can cast aside economics and basic common sense. I should point out that it's not just those reliefs or aggressive avoidance leading to perverse incentives, a lot of sensible IHT planning can. Also, for the avoidance of doubt I am not trying to suggest that IHT nor high taxes are a bad thing in principle, but rather that taxes have to be carefully thought about and designed - however they are mainly driven by politicians.
And BTW I am an accountant and while the above are made up for illustration, the principle is no concoction. I do not need to guess the number of clients I consider "substantially wealthy" where IHT significantly impacts their strategic decision making, the answer is all of them.