John McCain made good on his promise today to release his economic plan after recanting that pledge amidst Monday's campaign chaos. The Obama campaign calls the plan, "a day late and 101 million middle-class families short." Read below the excerpts about the plan for more reaction.
The Arizona senator called for trimming taxes on older Americans dipping into their retirement accounts, and for suspending tax rules he said "force seniors to sell their stocks in the midst of this financial crisis."
He said he would accelerate a tax write-off for those forced to sell at a loss in the current market conditions, and reduce capital gains taxes for 2009 and 2010 "to raise the incentive to save and invest," according to a statement outlining the proposals.
Older Americans "have seen the financial markets undertake a daily assault on their life savings in recent weeks," the statement said. "Families are being forced to sell at a loss to meet their bills."
McCain said withdrawals from retirement accounts -- IRAs and 401(k)s -- should be taxed at the lowest rate, ten percent, this year and next, for the first 50,000 dollars withdrawn from such accounts each year.
The Republican further proposed reducing the maximum tax rate on long term capital gains to 7.5 percent in 2009 and 2010, so as not to penalize Americans forced to sell stocks in current conditions.
Earlier, McCain's economic adviser, Douglas Holtz-Eakin, discussed the plan:
The adviser, Douglas Holtz-Eakin, said Mr. McCain would propose that people 59 years and older who withdraw money from IRAs or 401k retirement plans in 2009 and 2010 pay a tax rate of 10 per cent on the money rather than their higher normal tax rates. The plan would cost $36 billion, based on McCain campaign internal estimates, Mr. Holtz-Eakin said.
In addition, Mr. McCain is to propose three other new measures: a 50 per cent reduction in the capital gains tax on stock profits, from the current 15 per cent to 7.5 per cent, for a period of two years, at an estimated cost of $10 billion; an acceleration in the tax write-off for stock losses, allowing Americans to deduct $15,000 in losses a year for the tax years 2008 and 2009 (current rules allow deductions for up to $3,000 in losses), and a suspension on the tax on unemployment insurance benefits in 2008 and 2009.
The Obama campaign's response to McCain's economic plan:
"John McCain's latest gambit is a day late and 101 million middle-class families short. McCain's plan would spend $300 billion to bailout the same irresponsible Wall Street banks that got us into this mess without doing anything to help jumpstart job growth for America's middle class. His plan continues to provide no tax relief at all to 101 million hardworking families, including 97 percent of senior citizens, and it does nothing to cut taxes for small businesses or give them access to credit. Senator McCain also shows how little he understands the economy by offering lower capital gains rates in a year in which people don't have an awful lot of capital gains. His trickle-down, ideological recipes won't strengthen our economy and grow our middle-class, but Barack Obama's pro-jobs, pro-family economic policies will," said Obama-Biden campaign spokesman Bill Burton.