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But the people they inherited it from did :doh
So what? That is the way of the world. I get money and pay tax on it and then I get take that money and it goes to somebody else and they pay tax on it since it is now theirs and so on down the line. Same money - taxed again and again and again and again. People who inherit are not special in this regard and its time we stopped treating them differently than other folks who pay tax on the money they acquire. .