Adding up the tax plans of McCain and Obama

In its final stages, the presidential campaign is increasingly focused on taxes, a perennial flash point between the two major parties.

To hear John McCain talk, Barack Obama's tax plans would suck the entrepreneurial life out of an economy that needs all the help it can get.

Obama says McCain's proposals would reward large corporations, benefit the wealthy, and do little for the struggling middle class.

"I think tax policy is a major difference between Sen. McCain and myself," the Democratic nominee said during the final debate last week, asserting that his plans would benefit 95 percent of Americans. "And we both want to cut taxes. The difference is who we want to cut taxes for."

Republican McCain, in a speech in Miami on Friday, accused his rival of using tax policy as a vehicle for income distribution when the goal should be economic growth.

"Sen. Obama claims that he wants to give a tax break to the middle class, but . . . his plan gives away your tax dollars to those who don't pay taxes," McCain said. "That's not a tax cut. That's welfare."

Here are the highlights of their tax plans:

Income taxes. McCain would make permanent the Bush administration's tax cuts, which are scheduled to expire in 2010, thereby keeping the tax brackets at 10, 15, 25, 28, 33 and 35 percent.

He also has called for increasing the exemption for dependents by $500 per year until it reaches $7,000 in 2016, thereby reducing taxes for families. Dependent exemptions now are worth $3,500.

Obama would keep the current tax rates for most taxpayers but restore the higher, pre-Bush rates for individuals making more than $200,000 and families above $250,000, thereby raising the rates in the upper two tax brackets to 36 and 39.6 percent.

In addition, he favors giving everyone below those dollar limits a refundable tax cut amounting to $500 per individual or $1,000 for a family. The beneficiaries would constitute 95 percent of the population, Obama says.

Anyone who files a tax return would be eligible, including people who paid only payroll taxes and had no income-tax liability. In 2006, about 46 million returns resulted in no liability.

This proposal is the prime source of the McCain campaign's allegation that Obama wants to "spread your wealth around," on the theory that it's being funded by the higher taxes on the wealthy.

Obama wants to eliminate all income taxes for seniors making less than $50,000 per year; McCain has no permanent tax proposals aimed specifically at seniors.