The House voted yesterday to preserve the estate tax at current levels, in an effort to avoid the expiration of the tax completely in 2010 and its resumption at 2001 levels in 2011:

The House approved a measure Thursday that would make the current estate tax rate permanent, setting it at 45 percent for individual estates worth more than $3.5 million.

The bill passed 225 to 200, with 26 Democrats joining all Republicans present in voting no. If Congress does not act, the estate tax will disappear in 2010, then return in 2011 under the higher rates — 55 percent and a $1 million exemption — that existed before President George W. Bush took office.

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Some Democrats in both chambers would prefer to see higher estate tax rates, arguing that the pre-2001 rates were fair and provided the government with much-needed revenue. Making the current rates permanent would cost the government an estimated $234 billion in revenue over the next 10 years.

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“Abolishing the estate tax would add billions and billions to our deficit — and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer,” said House Majority Leader Steny H. Hoyer (D-Md.).

Under the current rate, .23 percent of all estates are subject to taxation in 2009, according to the Tax Policy Center, a think tank. Since the exemption of $3.5 million for individuals — married couples can generally exempt estates of up to $7 million — is not indexed for inflation, that percentage will gradually increase over time.

It is unclear when the Senate can fit in consideration of the estate tax, and whether the House’s approach could garner the 60 votes necessary to move forward in the Senate. The Senate is more likely to pass a one-year extension of current law, aides said, essentially deferring the question until next year.

I’m not really in favor of this move and would prefer the issue be deferred, though I don’t know if that would increase chances for a resumption of the tax at 2001 levels. The Republicans have no chance at all of new legislation that would abolish the estate tax for any length of time beyond 2010, but Democrats might find it difficult politically to pass anything like a resumption at pre-Bush levels after the midterms, especially if there happen to be significantly fewer Democrats around at that point.