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U.S. House Freedom Caucus wants tax reform plan before budget deal

WASHINGTON, July 12 (Reuters) - The conservative House Freedom Caucus threatened on Wednesday to block a fiscal 2018 budget resolution vital to tax reform, unless Republican leaders release a plan that slashes U.S. corporate taxes and doubles the standard deduction for individuals.

The demand from the hardline group could escalate infighting that has prevented Republicans in the House of Representatives from agreeing on a spending blueprint for the fiscal year beginning Oct. 1.

With about three dozen members, the Freedom Caucus can stymie any legislation in the Republican-controlled House.

Passing a budget resolution is vital to the success of a Republican tax overhaul effort because it would allow a bill to pass the 100-seat Senate with only a simple majority. Otherwise, the legislation would require 60 votes in a chamber where Republicans have only 52 seats.

The Freedom Caucus also repeated a call for the House to remain in session during August, saying lawmakers should also address healthcare and an increase in the federal debt ceiling rather than head home to their districts.

Budget negotiations have bogged down over the group's efforts to include more than $200 billion of cuts to mandatory spending programs over a decade in any budget resolution, a move opposed by Republican moderates.

President Donald Trump and Republicans in Congress have promised to deliver a tax reform package this year. But the House budget squabble and hurdles facing healthcare legislation in the Senate have begun to worry business lobbyists about the prospects for success.

The U.S. Chamber of Commerce sent a letter on Wednesday to Senate Republicans calling for tax cuts and other policy changes it said would make businesses more competitive at home and abroad.

"If a budget is put forth today, at $200 billion in mandatory spending and without decisions on tax reform, there would not be enough votes to pass it in the House," the Freedom Caucus chairman, Representative Mark Meadows, told a news conference.

In comments that paralleled a White House plan released in April, Meadows said tax reform should set a 16 percent corporate tax rate and double the standard deduction for individuals who do not itemize. Trump has called for a 15 percent corporate tax rate, versus the current 35 percent rate.

Freedom Caucus members also want House Republican leaders to abandon an unpopular border adjustment proposal that would tax imports.

Top Trump administration officials and Republican leaders in Congress are trying to agree on a framework for tax reform, and the White House has said a plan could be set by the end of July.

But there have been no tangible signs of progress in the closed-door discussions, while lobbyists and some congressional aides say the end-of-July deadline could be too ambitious. (Reporting by David Morgan; Editing by Peter Cooney)