FACTBOX: Obama, McCain's budget and tax proposals

(Reuters) - The U.S. presidential election in November will be a contest between Democrat Barack Obama and Republican John McCain.

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 tax cuts are set to expire at the end of 2010. He advocates cutting the corporate tax rate to 25 percent from 35 percent and he would allow businesses to immediately write off capital expenses.

McCain advocates a simpler tax system with two tax rates and a generous standard deduction. He would double the deduction for dependents to $7,000 to help those trying to raise a family, and phase out the alternative minimum tax, which threatens to ensnare millions of middle class taxpayers along with the wealthy.

He has proposed a suspending 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. 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.