Presidential hopefuls Barack Obama and John McCain have been slugging it out over their respective tax plans.

McCain has accused his Democratic rival of planning huge tax hikes for small and large businesses, reports WebCPA.

‘There will be change in Washington. The only question is what kind of change. Will we enact the single largest tax increase since the Second World War, as my opponent proposes?’ asked McCain, at a small business leaders group held earlier this week sponsored by the National Federation of Independent Businesses and eBay.

Obama has accused McCain of following on with George Bush’s policies of letting large businesses of the hook.

‘McCain wants to add $300 bn (£154bn) more in tax breaks and loopholes for big corporations and the wealthy, and he hasn't even explained how to pay for it,’ he said.

Obama said his plan would raise capital gains taxes to 20% from the current 15% level, not the 28% that Republicans have predicted. ‘My discussions with Warren Buffett indicate that it will probably not have any significant impact in terms of investment,’ he said.

Obama wants to exempt small businesses and start-ups from capital gains taxes. He has called for letting the Bush tax cuts expire, raising taxes on those making over $250,000 (£128,000).

McCain has called for elimination of the alternative minimum tax and an extension of the Bush tax cuts. He told small business leaders that Obama's tax plan would harm them. ‘Under Senator Obama's tax plan, Americans of every background would see their taxes rise - seniors, parents, small business owners, and just about everyone else who has even a modest investment in the market,’ he said.