If one of the social purposes of taxing wealth per se is to prevent massive accumulations within families, this theoretically could be accomplished through a tax on net worth which could be imposed periodically, without regard to the death of the property owner or the passage of the property to others. However, the U.S. system essentially permits individuals to accumulate unlimited wealth within his or her lifetime without any such periodic tax burden. Only upon the owner's death is this tax on "net worth" imposed.
Since the estate tax is "progressive" in nature, the greater the total net worth upon the decedent's death the greater the tax will be, generally. An obvious loophole would exist, however, if wealthy taxpayers could systematically reduce their wealth, which will be subject to tax when they die, by making gifts of property during lifetime, to the family members and other people who would otherwise have received the property upon the donor's death. The federal gift tax was originally established essentially to plug this loophole. In effect, transfers of property as gifts during the owner's lifetime (in excess of an annual threshold of $15,000 per donee of gifts of present interests (as indexed in 2021), and other limited exclusions) are subject to a gift tax as of the date of the transfer. Thus, the gift tax is essentially a necessary backup to the estate tax.