Presidential hopefuls Sen. Barack Obama, D-Ill., and Sen. John McCain, R-Ariz., clashed over their tax plans, trading accusations of hikes in capital gains and Social Security taxes.
"There will be change in Washington," said McCain, speaking to a group of small business leaders on Tuesday at a forum sponsored by the National Federation of Independent Businesses and eBay. "The only question is what kind of change. Will we enact the single largest tax increase since the Second World War, as my opponent proposes?"
Obama accused McCain of trying to outdo President Bush's tax policies. "I've said that McCain is running to serve out a third Bush term," he said. "But the truth is, when it comes to taxes, that's not being fair to George Bush. McCain wants to add $300 billion more in tax breaks and loopholes for big corporations and the wealthy, and he hasn't even explained how to pay for it."
Obama said his plan would raise capital gains taxes to 20 percent from the current 15 percent level, not the 28 percent that Republicans have predicted. "My discussions with Warren Buffett indicate that it will probably not have any significant impact in terms of investment," he said.
Obama wants to exempt small businesses and start-ups from capital gains taxes. He has called for letting the Bush tax cuts expire, raising taxes on those making over $250,000. His plan for payroll taxes would raise the cap on income subject to Social Security withholding, which is currently set at $102,000. Obama would allow income above the $200,000 level to be subject to Social Security taxes. Obama also called for cutting taxes for people making less than $75,000 a year and eliminating taxes on senior citizens who make less than $50,000 per year.
McCain has called for elimination of the alternative minimum tax and an extension of the Bush tax cuts. He told small business leaders that Obama's tax plan would harm them. "Under Senator Obama's tax plan, Americans of every background would see their taxes rise - seniors, parents, small business owners, and just about everyone else who has even a modest investment in the market," he said.
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