FACTBOX - McCain and Obama on taxes and fiscal spending

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(Reuters) - As the U.S. economy continues to slide ahead of the November 4 election, presidential rivals John McCain and Barack Obama have proposed a bounty of tax breaks and spending projects to stimulate jobs and investment.

Many are aimed at helping families cope with mortgages andrising food and fuel costs, but they also aim to fosterdevelopment of renewable energy sources, clean technologies andinfrastructure.

Below is an outline of plans from Republican candidateMcCain and Democratic candidate Obama. Both would increase thenational debt by trillions of dollars over a two-termpresidency.

BUSH 2001-2003 TAX CUTS

McCain: Make permanent all provisions of these cuts, whichare due to expire at the end of 2010, other than the repeal ofthe estate tax. Make the estate tax permanent with the first $5million (2.5 million pounds) exempted and a 15 percent rate oninheritance amounts above that level.

Obama: Make permanent select provisions, including expandedchild tax credits and the 10-, 15-, 25- and 28-percent tax ratebrackets. He would allow the top two rates of 36 and 39.6percent to return to their levels before the Bush tax cuts. Heproposes to make the estate tax permanent with a $3.5 millionexemption and a 45 percent rate.

NEW TAX CUTS

McCain: Double the personal tax exemption for dependents to$7,000. Reduce the maximum corporate tax rate in phases to 25percent from 35 percent and allow businesses a first-yeardeduction for purchases of equipment. Convert research anddevelopment expenses tax credit to a credit for 10 percent ofwages incurred for R&D and make this provision permanent.McCain also proposed a summer 2008 suspension of federal taxeson gasoline and diesel fuel.

Obama: Create refundable "Making Work Pay Credit" forlow-income workers of 6.2 percent of earnings up to a maximumof $8,100. Expand the Earned Income Tax Credit and Child andDependent Care Tax Credit. Create refundable "UniversalMortgage Credit" of 10 percent of mortgage interest for homeowners who do not itemize tax returns. Eliminate income tax forseniors making less than $50,000 per year. Mandate automatic401(k) and individual retirement account contributions, expandtax credits for low-income savings and college education funds.Make permanent the R&D and renewable energy production taxcredits.

CAPITAL GAINS TAXES, AMT

McCain: Keep current tax rates on dividends and capitalgains. Permanently extend the 2007 alternative minimum taxexemption, increase it by 5 percent per year after 2013.

Obama: Increase the maximum capital gains rate to 25percent. Require reporting of cost basis for calculating gains.Eliminate capital gains taxes on start-up businesses andprovide tax breaks for landowners selling to first-time familyfarmers. Extend and index the 2007 AMT patch.

HEALTH CARE

McCain: Include employer-paid health insurance as taxableincome and replace the previous exclusion with a refundable taxcredit of $2,500 per year for individuals and $5,000 forfamilies. This aims to encourage people to buy more efficienthealth insurance plans and control health care costs. Create ahigh-risk pool to help people with high health costs getinsurance.

Obama: Target tax subsidies to low income people to helpthem buy health insurance, expand Medicaid to cover all adultsup to the poverty line and the State Children's HealthInsurance Program to cover all children in families with incomeup to three times the poverty level. Impose a "pay or play"plan that would charge employers a 6 percent payroll taxpenalty if they don't provide health insurance for employees.

TAX SIMPLIFICATION:

McCain: Create optional alternative tax with two rates andlarger standard deductions and personal exemptions.

Obama: Provide taxpayers the option of a "pre-filled" taxform that they simply verify and sign.

REVENUE RAISING MEASURES

McCain: Eliminate oil and gas tax loopholes. Broaden thecorporate tax base by eliminating unspecified preferences.Repeal the domestic production activities tax deduction forbusinesses. Eliminate earmarked projects from the budget.

Obama: Eliminate oil and gas tax loopholes. Close loopholesthat allow companies to deduct chief executive pay. Taxpublicly traded financial partnerships as corporations. Taxcarried interest as ordinary income. Reallocate multinationaltax deductions. Raise payroll taxes for those earning above$250,000.

OVERALL EFFECT OF TAX, HEALTH CARE PLANS

McCain: According to the Tax Policy Center, a joint ventureof Washington-based think tanks The Urban Institute and theBrookings Institution, McCain's tax and health care plans wouldreduce federal tax revenues by $4.2 trillion over the 2009-18period compared with current law, under which the 2001 and 2003tax cuts expire at the end of 2010 and the AMT remains in fullforce. Compared to a "baseline" scenario that assumes extensionof the Bush tax cuts and extension of an indexed AMT "patch,"McCain's plan would reduce revenues by $600 billion for the10-year period. Including interest, the McCain plan wouldincrease the national debt by $5 trillion by 2018.

Obama: Plans would cut tax revenues by $2.8 trillion overthe 2009-18 period compared with current law, according to theTax Policy Center. Compared to the baseline scenario, Obama'splan would increase revenues by $800 billion. Includinginterest costs, his plan would increase the national debt by$3.4 trillion by 2018.

The Tax Policy Center cost estimates do not include thefollowing spending plans for economic stimulus, orenergy/infrastructure development:

ECONOMIC STIMULUS SPENDING

McCain: Spend up to $10 billion to allow some homeowners totrade high-interest, adjustable-rate mortgages for safer,fixed-rate loans. Summer 2008 suspension of 18.4 cents-a-gallongasoline tax and 24.4 cents-a-gallon diesel tax.

Obama: Provide immediate tax rebate of up to $1,000 forlow- and middle-income couples to help them cope with highenergy costs, paid for by additional windfall profits taxes onenergy producers. Second, $50 billion economic stimulus plan,including $25 billion in infrastructure improvements and $25billion to aid state and local governments to help them avoidspending and services cuts and deal with home foreclosures.

ENERGY, INFRASTRUCTURE SPENDING:

McCain: Build 45 nuclear reactors by 2030 and commit $2billion annually until 2024 to clean-coal research anddevelopment. Proposes "serious investment" to upgrade electricpower transmission system, including capacity to chargeelectric cars if mass-produced in the next decade. Award $300million prize for development of a battery package that wouldmake electric cars viable on a large scale, create $5,000 taxcredit for customers who buy zero-carbon emission vehicles.

Obama: Invest $150 billion over 10 years to advancebiofuels, renewable energy and clean coal plants. Create $1billion annual investment program to help manufacturersmodernize infrastructure, adopt clean technologies. Provide $4billion in tax credits to help automakers retool plants andinvest in advanced propulsion and lightweight materials. Create$60 billion National Infrastructure Reinvestment Bank over 10years to rebuild roads, bridges, ports and railways. Proposesto improve mass transit, develop high-speed rail corridors andmodernize air traffic control system.

(Reporting by David Lawder. editing by Vicki Allen)