Presidential candidate Sen. John McCain, R-Ariz., and his rival Sen. Barack Obama, D-Ill., have proposed differing tax and retirement plan measures to deal with the economic downturn.
McCain proposed that the first $50,000 withdrawn from individual retirement accounts and 401(k) plans by people over the age of 60 should be taxed at the lowest rate, 10 percent, in 2008 and 2009. He also called for suspending the tax rules that require seniors to begin selling off equities from their IRA and 401(k) accounts when they reach age 70.5.
In addition, McCain proposed increasing the amount of capital losses that can be used in 2008 and 2009 to offset ordinary income, from $3,000 to $15,000. He also suggested cutting in half the maximum tax rate on long-term capital gains, from 15 to 7.5 percent, in 2009 and 2010.
McCain wants to eliminate taxes on unemployment benefits. He has also proposed buying failing mortgages that are putting homeowners in danger of foreclosure and substituting them with fixed-rate mortgages guaranteed by the Federal Housing Administration at terms that are manageable for homeowners.
"The moment requires that government act," McCain said at a Pennsylvania rally. "And as president I intend to act quickly and decisively."
Obama has proposed that every family be allowed to withdraw up to 15 percent from their IRA or 401(k), up to a maximum of $10,000, without any fine or penalty, through 2009. He is also proposing a three-month moratorium on foreclosures. In addition, Obama is proposing a Jobs and Growth Fund that would provide money to states and local communities for infrastructure projects such as rebuilding and repairing bridges, roads and schools.
"We need to pass an economic rescue plan for the middle class and we need to do it now," he said in a statement.