FACTBOX-Obama, McCain's budget and tax proposals
May 21 (Reuters) - The U.S. presidential election in November looks increasingly likely to be a contest between Democrat Barack Obama and Republican John McCain.
Obama, an Illinois senator, is less than 100 delegates shy of capturing the Democratic nomination after his showing in the latest primary elections. McCain, an Arizona senator, is the presumptive Republican nominee.
Following is a summary of their tax and budget proposals:
TAXES
McCain would continue President George W. Bush's 2001 and 2003 tax cuts that he initially opposed. Those cuts are set to expire at the end of 2010. McCain advocates cutting the corporate tax rate to 25 percent from 35 percent and he would allow businesses to immediately write off capital expenses.
He advocates a simpler income tax system with two rates and a generous standard deduction. He would double the deduction for dependents to $7,000 to help those raising a family, and would phase out the alternative minimum tax, which threatens to ensnare millions of middle class taxpayers along with the wealthy.
McCain has proposed suspending the federal gas tax during the summer.
Obama would let tax cuts for the wealthy expire. For the middle class, he proposes a $500-per-person tax credit, or $1,000 per family, to offset payroll taxes.
He would eliminate taxes for elderly people making less than $50,000 per year. He advocates simplifying the tax-filing process.
BUDGET
McCain rails against excessive government spending and would reduce budget deficits through significant cuts in discretionary spending -- those parts of the budget that do not finance Social Security, Medicare and other entitlement programs that are automatically funded each year.
Affluent participants in the Medicare drug program would pay higher premiums.
Obama says he would require disclosure of congressional pet projects and make lawmakers pay for any new spending or tax breaks through cuts in other programs or new revenue. (Compiled by Andy Sullivan, Donna Smith and JoAnne Allen; Editing by John O'Callaghan) (To read more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)
