I know the United States has the inheritance tax. But I do not really know the purpose or the point behind it. What is the point of the inheritance tax? Why must the inheritance assets be taxed instead of given directly to the heir(s)?
Consider a scenario: You make investments(perhaps in the stock market or real estate, but any investment will serve for the example). When you sell those investments, you realize (hopefully) a capital gain. In the US, the two principal forms of taxation on individuals is on income and capital gains.
Let's say you bought stock 10 years ago, and it's doubled in value to date, and you're still holding it. You don't pay the capital gains tax on that increased value until you actually sell it. As long as you're holding on to it, you havent "realized" your capital gains. Same with real estate...no capital gains until you sell.
In effect, the estate tax (inheritance tax) is a form of capital gains recapture tax, that "recognizes" the capital gains as you "sell" your final assets to your estate and subsequently your heirs through the probate process.