McCain, Obama stake out divergent paths on taxes

Republican John McCain and Democrat Barack Obama staked out starkly opposing stances on taxes yesterday, with Mr McCain promising corporate tax breaks and Mr Obama pledging tax increases for many.

In a speech in Washington Mr McCain accused Mr Obama of seeking the single largest tax increase since World War II while Mr Obama, in a television interview, said he would increase taxes on the wealthy and on stock profits to pay for a middle-class tax cut of $1,000 a year.

"No matter which of us wins in November, there will be change in Washington. The question is what kind of change?" Mr McCain told a conference for small businesses.

Mr Obama told CNBC that he would raise taxes on Americans making $250,000 a year or more and raise the capital gains tax for those in higher income brackets while exempting small investors. He said the US economy has been "out of balance for too long."

"So the general principle of raising taxes on higher income Americans, like myself, and providing relief to those who haven't benefited as much from this new global economy, I think, is a sound one," Mr Obama said.

But Mr Obama, 46, said the tax increases he seeks would be dependent on the economic situation he inherits from President George W. Bush should he win the November election.

"Some of those you could possibly defer," he said. "But I think the basic principle of restoring fairness to our economy and encouraging bottom up economic growth is important."

The differences on how to spur new growth in the sluggish US economy, at a time of rising unemployment, record-high gasoline prices and a persistent housing crisis, represented a key point of argument for the two candidates in their battle to determine who wins the presidency.

Mr Obama and other Democrats believe economic conditions, including $4-a-gallon gasoline, will persuade many Americans to vote for them in November. Mr McCain wants to fight the election on national security, which he considers his strength.

Mr McCain, 71, vowed to maintain Mr Bush's tax cuts, lower corporate tax rates from 35 per cent to 25 per cent and allow companies to expense new equipment and technology in their first year.