The plan, estimated to cost USD52.5bn, heavily targets the needs of senior citizens, in an attempt to clinch votes in states with older populations like Pennsylvania. He also plans to introduce policies to try and stimulate investment in the market place by creating incentives for companies to achieve growth within the next couple of years in an attempt to effectively ‘kick start’ the economy again.

Sen. McCain proposes to cut taxation on long-term capital gains in half, to 7.5% for 2009 and 2010, which would cost the Treasury USD10bn. McCain hopes that the proposal will “promote buying, raise asset values, and help companies shore up their pension plans for workers and retirees.”

Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said that the capital gains cut would expire around the time President George W. Bush's 2001 and 2003 tax cuts expire, giving Congress an opportunity to consider long-term tax policy. Sen. McCain has also proposed making the Bush tax cuts permanent.

Furthermore he proposes raising the amount of stock losses that can be used to offset ordinary income to USD15,000 from USD3,000.

The Senator said if elected he would guarantee 100% of Americans' savings for six months to avert a run on the banks, and support the unemployed by making unemployment insurance benefits tax exempt for those whose income was less than USD100,000.

The most expensive part of McCains’ plan, costing an estimated USD36bn, would be to lower the tax rate on money that seniors withdraw from IRAs and 401(k) retirement plans to the lowest rate of 10%, which currently only applies to the lowest income tier. Under current law, income from these retirement funds is taxed at standard personal tax rates. The 10% tax would apply to the first USD50,000 withdrawn from such accounts in 2009 and 2010. The McCain camp estimated it would help nearly nine million Americans over the age of 60.

McCain also plans to use USD300bn of this month's USD700bn rescue package to buy up bad mortgages and reset them with more favorable terms so homeowners wouldn’t owe more on their mortgages then the value of their houses.

McCain, who has slipped behind Obama in the opinion polls, is keen to regain ground on the key issue of the economy after his Democratic opponent announced his own wide-ranging pacakage of tax cut proposals earlier this week.