Fiscal Face-Off: Obama and McCain Battle over Economic Plans and Tax Policies

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ANYONE WHO DOUBTS THAT THE American dollar just isn't what it used to be need look no further than the nation's record job losses, exorbitant food and gas prices, and unprecedented home foreclosure rates. These and other bread-and-butter issues will be at the forefront of voters' minds when they head to the polls in November, and the outcome of the presidential election will likely depend on which candidate they believe has the best plan to reverse these economic trends.

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Sens. John McCain and Barack Obama, the presumptive nominees, have released tax plans that offer distinctly different approaches each claim will help cure the nation's economic woes.

McCain's plan includes cutting the estate tax, eliminating the Alternative Minimum Tax, eventually doubling the $3,500 child tax deduction for every dependent, and providing refundable tax credits of $2,500 for individuals and $5,000 for families, who buy health insurance.

Obama's plan calls for a $50 billion stimulus package that would provide energy rebate checks for many families, a fund to help families avoid foreclosure, and increased assistance for states hit especially hard by economic setbacks. He also wants to eliminate income taxes for retirees making less than $50,000 a year, mandate automatic 401(k)s and IRAs, offer income-related subsidies for health insurance, and expand child and dependent care tax credits.

Obama's plan would also make permanent select provisions of President George W Bush's tax cuts but would allow other aspects of the cuts to expire for taxpayers earning more than $250,000 a year. He would make the estate tax cut permanent with a $3.5 million exemption (meaning estates that fall below this cutoff pay no estate taxes) and a 45% rate. In addition, Obama's plan offers individuals a refundable "Making Work Pay Credit" of 6.2%, on up to $8,100 of earnings.

McCain proposes to make permanent all of the provisions of the Bush tax cuts except for the estate tax repeal, instead favoring a $5 million exemption and 15% rate. The current tax law under Bush has a $3.5 million exemption for 2009 and a max rate of 45%, with a scheduled repeal in 2010.

McCain's tax plan is basically an extension of the current Bush tax cuts, says Michael Tanner, a senior fellow at the Cato Institute, a nonprofit public policy research foundation headquartered in Washington, D. …