McCain Calls For No Taxes On Unemployment Benefits

BLUE BELL, Pa. (AP) - Republican presidential candidate John McCain proposed Tuesday that the government eliminate taxes on unemployment benefits, one plank in an economic plan that comes as he trails Democratic rival Barack Obama in national polls.

More than 3.6 million Americans received unemployment benefits, according to the McCain campaign. If the government eliminated taxes on unemployment benefits, recipients would see an increase on average of nearly 10 percent, the campaign said.

In a statement released ahead of McCain's speech scheduled Tuesday morning near Philadelphia, the campaign said he was proposing lowering the tax rate on Individual Retirement Accounts and 401(k) plans to the lowest rate, 10 percent, on the first $50,000 withdrawn. The campaign estimated it would affect 9 million people over the age of 60.

McCain's plan also called for reducing the tax rate on capital gains to 7.5 percent for two years.

Obama's economic plan announced Monday included a call for suspending the tax on unemployment benefits. The Democrat also proposed allowing people to withdraw up to $10,000 from their retirement accounts without any penalty this year and next, a 90-day moratorium on home foreclosures at some banks, and a two-year tax break for businesses that create new jobs.