updated 11/14/2007 1:55:01 PM ET 2007-11-14T18:55:01

Billionaire Warren Buffett told the Senate Finance Committee on Wednesday that Congress should keep the estate tax rather than repeal it and help a few rich Americans like him.

“I think we need to ... take a little more out of the hides of guys like me,” Buffett told the panel.

One of the world’s richest men and biggest philanthropists, Buffett has been outspoken against efforts, mostly by Republicans, to repeal or reduce the federal tax on inheritances. Democrats argue that a repeal would amount to a huge windfall for the nation’s wealthiest families.

The fate of the levy will effectively be decided during next year’s presidential and congressional elections.

Estates worth up to $2 million this year and next will be exempt from the federal estate tax. Portions of estates above that threshold will be taxed at 45 percent.

In 2009, the exemption level rises to $3.5 million, and by 2010 the estate tax will be repealed — but only for a year.

Unless Congress changes the law, it comes roaring back in 2011 with an exemption threshold of only $1 million and a top tax rate of 55 percent.

Buffett said inheritance taxes preserve a measure of meritocracy, and with it opportunity, by recycling portions of great wealth through public coffers.

“The resources of society I don’t think should pass along in terms of an aristocratic dynasty of wealth,” Buffett told the panel. “I believe in keeping equality of opportunity as much as you can in this country.”

Those who want to repeal the tax say it is particularly hard on small farms and businesses whose heirs may have to liquidate assets to pay the levies.

Committee Chairman Max Baucus, D-Mont., who wants to repeal the tax, says that according to the IRS, out of nearly 2.5 million deaths in 2004, about 19,300 estates paid the estate tax.

But the panel’s top Republican, Sen. Chuck Grassley of Iowa, wants to keep the tax on the books.

“Instead of the free market determining when assets are bought or sold, the death tax makes that determination,” Grassley said. “There is something fundamentally wrong when the government swoops in after a funeral to take a cut of what that person had worked their whole life for, and has already paid taxes on at least once.”

Lawmakers and interest groups on both sides of the debate see several potential compromises, perhaps by freezing the exemption rate at $3.5 billion and capping the tax rate at 35 percent.

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