UPDATE 2-Tax fight clouds prospects for passing budget in U.S. House

(Recasts, adds comment from MacArthur, details, background)

WASHINGTON, Oct 25 (Reuters) - Republican infighting over a proposal to scrap a deduction for state and local income taxes threatened to derail a budget plan crucial to the party's tax-cut hopes that was set for a vote in the U.S. House of Representatives on Thursday.

Some Republican lawmakers are resisting the proposal to eliminate the popular deduction, which would hit middle-class voters in high-tax states like New York, New Jersey and California.

The idea is one of several that have been floated as part of an effort championed by President Donald Trump to enact large-scale tax cuts. The budget blueprint, which has already been approved by the Senate, is central to Republican efforts to push tax legislation through Congress in the face of staunch opposition from Democrats.

The proposal "is obviously an issue of concern to a group of members, and the shared goal is to work together to address the issue and move forward," an aide to House Majority Whip Steve Scalise said on Wednesday when asked whether there might not be enough Republican support to pass the budget resolution.

With the clock ticking toward a scheduled budget vote, the impasse had yet to be settled. Republican lawmakers had planned to meet House Speaker Paul Ryan's office at 9 p.m. to try to hammer out a resolution, but the meeting was postponed to Thursday morning, according to a Republican congressional aide.

Republican Representative Tom MacArthur of New Jersey told reporters it was possible there were enough votes to block the budget plan. "Its got to be close," he told reporters.

Scalise told Fox News Channel that lawmakers "were not there" yet in terms of resolving the dispute, but he predicted the House would approve the budget plan on Thursday.

"We're going to get it done," he said.

Republicans have sketched out a tax package that independent analysts say would cut taxes for businesses and individuals by up to $6 trillion over the next decade, but detailed legislation is not expected to be unveiled until next week.

If Congress approves a tax-cut plan, it would hand Trump his first major legislative win since he took office in January.

"I am urging Republicans who have questions about SALT (the state and local tax deduction) to vote no tomorrow, and keep voting no until we get some compromise we can live with," Republican Representative Peter King of New York told Reuters.

An aide to Republican Representative Tom Reed of New York said there was discussion of a compromise that would call for a tax credit up to a certain income amount to replace the deduction, and that he would support it.

Republican Representative Leonard Lance of New Jersey told Reuters he was not interested in a compromise at this time, and instead wanted the repeal provision taken off the table.

"I will be voting no on the budget tomorrow," he said. (Reporting by Richard Cowan and Amanda Becker; Additional reporting by Susan Cornwell; Writing by Tim Ahmann; Editing by James Dalgleish and Peter Cooney)