We definitely have a spending problem, but that doesn't excuse a loophole like an IRA not being taxed for the convenience of the person who inherited it.
This is not an inheritance issue, these monies were tax deferred for the individual, and taxes should be due when they die.
Since 1) inherited tIRA withdrawals are already required plus taxed, and 2) many inheritors deplete the IRA funds immediately and are quickly taxed on the whole amount, I question how much sooner the tax dollars will get to Uncle Sam. In fact given #2, forcing most everyone into a 5-year withdrawal might actually reduce the speed at which IRAs are taxed.
There are range of beneficiary withdrawal options under current law. The proposal in the OP's news link would eliminate them in favor of one treatment of taxes being due over five years.
The CBO has access to all of the IRS data on how non-spouse beneficiaries are actually handling their distributions and the tax payments. They no doubt have some big spreadsheets that show what-if projections for all kinds of options.
For example:
Bellbarbara's proposal:
1. 100% immediately taxable at beneficiary's tax rate OR, possibly
1A. 100% immediately taxable at the deceased's tax rate
Current options are listed below (they are not mutually exclusive). All withdrawals are taxable at the beneficiary's tax rate. The minimum withdrawals are subject to an overriding provision that if an IRA owner dies on or after the required beginning date (typically at 70-1/2), the remaining interest must be distributed at least as rapidly as under the minimum distribution method being used as of the date of death.
2. Withdraw some or all immediately
3. Take the entire account by the end of the fifth year following the year of the owner's death. If this rule applies, no distribution is required for any year before that fifth year.
4. Use the life expectancy table and the beneficiary's age as of his or her birthday in the year following the year of the owner's death, reduced by one for each year since the year following the owner's death. Example: a 50-year-old with a life expectancy of 85 has a first-year taxable withdrawal of 1/35th of the IRA balance.
Baucus's proposal:
5. One treatment of taxes in lieu of the current options, with taxes due over five years (apparently similar to #3).
Htown Harry's proposal:
6. Keep the current options, but change #4 to a table based on the owner's projected life expectancy at death. For example, if a 65-year-old dies 20 years "early" compared to life expectancy of 85, the beneficiary would be required to withdraw 1/20th of the IRA balance in the first year. (Similar to the override provision that now only applies if the owner is already subject to RMD's).
Greyhare's speculation that any changes will produce limited additional revenue may or not be correct. I think that conculsion may be based on an assumption that options 2 and 3 are chosen by most beneficiaries and at an equal frequency by beneficiaries inheriting large IRA's.
My guess is that the biggest IRA's are most frequently kept largely tax-deferred for long periods using option #4, hence the number-crunchers at CBO believe there's real money to be found by tightening up the rules.