In a comment earlier today, I responded to a comment regarding inheritance taxes. As I find the topic interesting, I decided to expand on it. Consider this a work-in-progress.
Inheritance taxes are frequently put forward as a sort of anti-aristocratic tool; a way to somehow prevent families from passing large sums of money -- and consequently, power -- down from one generation to another and perpetuating themselves without any real 'work.'
I believe this is wrong, in multiple senses. First, it is wrong in the moral sense, since I believe that it is a violation of any reasonable definition of human rights which allow for the free and independent action of individuals to exercise control over their property as they see fit. (I am aware that there are some people who do not believe in such rights, but frankly I'm not interested in arguing with them -- I'm also aware that there are people who believe that the Earth is flat, or that God created the world 5,000 years ago in about a week; there's a certain point where I'm willing to just write people off as wrong and save my breath. Suffice it to say that if you don't believe in, or are unwilling to take the concept of physical property as a premise, I have very little else to say to you.)
Leaving aside the moral wrongness of inheritance taxes, I also think that they clearly fail at what's often put forward as their chief purpose: preventing the creation of a capitalist aristocracy. Far from this, they actually perpetuate and protect a very particular kind of non-meritocratic aristocracy: the aristocracy not of money, but of political and social power and connections.
Inheritance taxes punish hardest those people who are highly successful in the financial sense, but unsuccessful in the political or social realms; when they die, they leave their children mostly money, which is then pillaged by the government. In contrast, someone else who took the majority of their financial wealth and skillfully converted it to political power (a basically straightforward transaction, for someone raised in the right environment), could easily pass these connections onto their children, entirely untaxed and unfettered.
Thus, the true aristocracy escapes the inheritance taxes and manage to perpetuate their power, because their biggest assets are not necessarily in their bank accounts or even in their investments, they are in their social networks and contacts; they are in the people that they can get their children in to meet; the schools they can get them into; in some cases, simply their names themselves.
Rather than being hurt by inheritance taxes, the true aristocracy realizes that wealth is more than just money, and doesn't seem too worried by them; you rarely hear the Rockefellers or the Kennedys whining, for instance. And why should they -- in fact, inheritance taxes are the best form of protectionism for the truly powerful, because it provides a barrier to entry, keeping the nouveau riche from ever pushing themselves into the very top echelon. The nature of true power is that it takes time to accrue, and by levying punishing taxes on those who have recently acquired power (and still have it in cash, rather than in the more nebulous social connections of "old money") they can keep them down and the playing field sparse.
In short, inheritance taxes protect and encourage those who play 'by the rules' -- rules written by the very powerful. Buy into the system, take your money and pour it into quasi-philanthropy, skillful investment, and political contributions, and you can create power that will last through generations; try to keep it in the bank, and it'll be decimated before your children can use it.