WASHINGTON (Reuters) - U.S. President Donald Trump could find Democratic support for a corporate tax reform package if a comprehensive tax code overhaul runs aground over Republican infighting, a Democratic lawmaker told Reuters on Friday.
Representative John Yarmuth, top Democrat on the House of Representatives Budget Committee, predicted Trump's promise to deliver the biggest tax reform since Ronald Reagan would have to be scaled back if the Republican-controlled Senate fails next week to adopt legislation dismantling Obamacare, formally known as the Affordable Care Act.
The Trump administration and Republican congressional leaders are trying to agree in closed-door talks on a comprehensive 2017 tax reform bill that would cut taxes for individuals and businesses and overhaul the U.S. tax code. Their aim is to unveil legislation in September.
But a Republican effort to dismantle the Affordable Care Act, which would could ease the path to tax reform, faces difficulties in the Senate, where a healthcare measure is opposed by enough lawmakers to block passage.
Yarmuth, a Kentucky Democrat, said there are also few signs that House and Senate Republicans can unify their fractured caucuses to pass a fiscal 2018 budget resolution, which they must do to enact tax reform without Democratic votes.
"Tax reform is going to be really difficult," Yarmuth said. "If they limited it to corporate tax reform, I think there's an opportunity to get it home and get it done on a bipartisan basis."
Trump wants to cut business tax rates to 15 percent.
Yarmuth said "a fair amount of Democrats" agree that the current 35 percent corporate tax rate is too high and should be more competitive with other countries. A bipartisan package could lower the corporate tax rate to 25 percent or 28 percent and include measures to help small businesses, Yarmuth said.
Republicans have thus far balked at the idea of a narrow corporate tax deal. On Thursday, House Ways and Means Committee Chairman Kevin Brady said Republicans would reject tax legislation that left the corporate rate at around 28 percent.
But tax rate targets have eluded Republican efforts to hammer out a deal. Some lawmakers say a defeat for the Senate healthcare bill would make tax reform harder by leaving in place hundreds of billions of dollars in Obamacare taxes
Meanwhile, the House Budget Committee hopes to send a budget proposal to the floor next week that would include a procedural path for tax reform to proceed with only Republican votes, panel members said.
They warned that any Republican deal within the committee did not ensure speedy passage in the Republican-led House, where conservative Republicans want a budget that includes steep cuts to domestic spending, which more moderate Republicans oppose.
Yarmuth said Republicans, at one point, considered using language in a 2018 budget proposal - known as reconciliation instructions - for both tax reform and healthcare, a move that could keep hopes for dismantling Obamacare alive if the Senate fails to pass a bill.
Reporting by David Morgan and Amanda Becker; additional reporting by Richard Cowan, Ginger Gibson and Andy Sullivan; Editing by Cynthia Osterman