Obama calls for $1,000 income tax cuts

The legislation — which Obama will champion if elected president in 2008 — calls for an income tax cut of $1,000 per working family.

It would eliminate income taxes for seniors who earn less than $50,000 a year, provide an annual raise in the minimum wage, offer quality after-school programs, and expand family and medical leave.

The plan also would:

—Target mortgage fraud by raising “penalties on lenders who have broken the rules.”

—Provide a tax credit covering 10 percent of a family’s mortgage interest payment each year.

—Establish a Credit Card Bill of Rights to ban “unilateral changes to a credit card agreement.”

—Create a $4,000 refundable tax credit when a student enrolls in college.

Obama, a Democratic U.S. senator from Illinois, said he wants to “put some wind at the backs of working people, to lower the cost of getting ahead” and “protect and extend opportunity for the middle class.”

Like rival U.S. Sen. Hillary Clinton’s plan to rejuvenate middle-class fortunes, Obama’s package also offers a workplace pension policy that requires businesses to enroll workers in portable, direct-deposit retirement accounts.

“And the federal government will match savings for working families,” Obama said, although he didn’t disclose costs. “This will dramatically increase the number of Americans who save for retirement.”

“There has been a lot of talk in this campaign about the politics of hope,” Obama concluded. “But understand, the politics of hope doesn’t mean hoping that things come easy. It’s a politics of believing in things unseen; of believing in what this country might be; and of standing up for that belief and fighting for it when it’s hard.”

“And what binds us together, what makes us one American family is that we stand up and fight for each other’s dreams, not just our own.”

Earlier this year Obama laid out his plan for more than $80 billion in tax cuts for middle-class Americans offset by tax increases for investors and companies. That proposal involved raising the top rate on capital gains and dividends, eliminating ‘‘corporate loopholes,’’ including one used by hedge funds and private-equity firms, and cracking down on overseas tax havens.

Clinton, of New York, and another Democratic rival, former U.S. Sen. John Edwards (D-N.C.), have also endorsed tax increases for investment funds and wealthier Americans.

Obama is on a week-long campaign swing through Iowa, home of the nation’s first presidential contest on Jan. 3. He trails Clinton in state polls.

Contributing: Bloomberg News