A top economic adviser to President Bush on Friday judged the chances for a deal this year on lowering corporate tax rates to be “very low.”

The prediction all but quashed any hope of a bargain between Treasury Secretary Henry Paulson and Ways and Means Committee Chairman Charles Rangel (D-N.Y.) on an area of tax policy where each had previously shown a willingness to find common ground.

A spokesman for Rangel, Matthew Beck, said, “That’s disappointing, to hear an administration official say that when Secretary Paulson has been so willing to discuss the issue with Chairman Rangel.”

A spokesman for Paulson declined to comment.

The prospects for a deal on corporate tax reform brightened and then dimmed last year after talks between Rangel and Paulson appeared to fall flat.

In exchange for his support for lowering the corporate tax rate, Rangel had sought the administration’s backing on his plan to repeal the Alternative Minimum Tax (AMT) while keeping the overall level of tax revenues flowing to the federal government unchanged. Abolishing the AMT would drain as much as $800 billion in revenues from the Treasury over 10 years.  

When Rangel introduced his proposal in legislative form last fall, he included a provision cutting the corporate tax rate from 35 percent to 30.5 percent, a reduction that Republicans criticized as paltry.

Aside from repealing the AMT, the bill offered relief for taxpayers by raising the standard deduction and expanding the child and earned-income tax credits.

Rangel proposed paying for the full cost by abolishing various business tax breaks and imposing a tax surcharge on wealthy families — provisions that led the Bush administration and K Street lobbyists to roundly criticize the bill.

Still, Rangel expressed his desire to reach an agreement with the Bush administration on tax reform. At the time, Rangel called the legislation a starting point for a discussion on the matter, saying he would tackle it again in 2009.

Rangel again voiced a willingness to strike a deal in December, after the Treasury released a long-awaited report advocating possible strategies for tackling corporate tax reform.

“The American people expect the executive branch to work with Congress to reform our complicated and ineffective tax code, and I believe we can reach some type of agreement on this critical issue,” Rangel said in a statement.

He added, “There is no question that Paulson’s thoughts on corporate tax reform are very similar to mine.”

One approach offered in the Treasury study was to broaden the tax base by eliminating tax breaks and credits in order to lower the overall corporate rate. In broad form, that mirrors the approach Rangel adopted in his legislation and that was used in 1986 to overhaul the tax system.

However, one of Paulson’s top advisers on tax matters, Eric Solomon, cautioned against interpreting the report as containing firm proposals backed by the administration.

“There are no policy recommendations in this study. We believe it will provide significant substance for discussion, and will further the effort to inform the public policy debate,” he said.