Buffett backs estate tax, decries wealth gap

WASHINGTON (Reuters) - Billionaire Warren Buffett on Wednesday endorsed the estate tax as a check on wealth accumulation, while two senior U.S. senators said they want the tax repealed.

Warren Buffett, chairman and CEO of Berkshire Hathaway, sits in front of a Forbes Magazine which lists the top 400 wealthiest Americans, before speaking at a Senate Finance Committee hearing about "Federal Estate Tax: Uncertainty in Planning Under the Current Law" on Capitol Hill in Washington, November 14, 2007. REUTERS/Jason Reed

Revisiting a long-standing debate over the controversial tax, the Senate Finance Committee held a hearing where Chairman Max Baucus said he supports ending the estate tax, although he said he did not expect this to happen any time soon.

“I think everyone in this room knows we’re not going to repeal the estate tax. It’s not going to happen in the foreseeable future,” he said.

The Montana Democrat was joined by Iowa Sen. Charles Grassley, the panel’s top Republican, who said, “The estate tax is unjust. ... Death should not be a taxable event.”

But Buffett, the second-richest man in America after Bill Gates, according to Forbes magazine, said recent tax law changes have tended to benefit people like him.

“Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline,” Buffett said. “A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy.”

Buffett, the chief executive of Berkshire Hathaway BRKa.N questioned any effort to further cut taxes for the wealthy.

“Further shifting of this burden away from the super-rich is not the way to go,” he said.

“In a country that prides itself on equality of opportunity, it’s becoming anything but that as the gap between the super-rich and the middle class is widening.”

Under present law, maximum estate tax levels have edged down to 45 percent from 55 percent in 2001. The rate goes to zero in 2010 but returns to 55 percent in 2011 if lawmakers do nothing, which looks unlikely.

Colorado Democratic Sen. Ken Salazar said at the hearing: “I don’t think there’s going to be a repeal of the estate tax here. But there is going to be a reform.”

Kentucky Republican Sen. Jim Bunning said repeal has proven to be politically unattainable. “We can’t get that done ... We ought to be able to come to a compromise,” he said.

Congress’ Joint Committee on Taxation has estimated that 9,600 U.S. estates will be subject to the estate tax in 2009. The number will jump to an estimated 62,000 in 2011 and continue rising annually after that, it said.

Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn