John Oliver rather brilliantly explains American wealth and how it is compounded by the estate tax here. He misses one little point though, when refuting a Fox commentator who says that while she doesn't have $5 million she would really like to someday and why should she then have to pay tax on it?
First, let's assume that she is married and she and her husband don't just accumulate $5 million each but accumulate $6 million. Each. A total of $12 million. And further, let's assume she makes it before year end and then dies this year. (The exemption is going up every year. By the time she's 80 it's hard to know what it would be.)
So her heirs are going to get $12 million. She's worried about the tax they'll pay.
Well, first of all, the first $5.34 million of her inheritance will be exempt from taxes. And the first $5.34 million of her husband's wealth as well. So, there is $10.68 million with marginal tax rate of 0. Nothing.
Now, after that, the tax rate is 40%. (And actually, 40% is the top rate. It might be lower for the first few million but I couldn't find that information. So this is worst case.) So, the remaining $1.34 million of the $12 million will be taxed $528,000.
For the whole $12 million, that works out to an average tax rate of 4.9%.
To put that in perspective, a person who actually worked to earn only a tenth of that - say $1.2 million - would pay about 34%. If they made 1/10th as much money, they'd pay 10X the tax rate. And of course if this TV commentator leaves behind ONLY $5.34 million, the heir's average tax rate is 0, considerably lower than the rate paid by working stiffs.