At our very core, we conservatives remain steadfastly – and justifiably – opposed to more taxes.

Not only do taxes take hard-earned wages from working Americans on penalty of imprisonment, they typically divert those dollars toward less-creative and less-beneficial uses. Taxes also increase the ever-growing degree of control that government exercises over our daily lives.

To be sure, a minimal amount of taxation is necessary to carry out the core functions of government. But as illustrated by the fact that we choose FedEx or UPS over the Post Office when prompt delivery is absolutely critical, our dollars are usually better-applied by the private marketplace than by government. Reduced taxes unleash the creative forces that grow our economy, whereas higher taxes stifle growth and prosperity, as illustrated perfectly by European economic stagnation.

So naturally, conservatives’ antennae perk up when Senator Barack Obama boldly asserts that John McCain will begin taxing health care benefits for the very first time. This week, Obama commenced a series of campaign commercials stating exactly that:

“On health care, John McCain promises a tax credit. But here’s what he won’t tell you: McCain would make you pay taxes on your health benefits, taxing your health care for the first time ever, raising costs for employers who offer health care, so your coverage would be reduced or dropped completely. You won’t find one word about it on his website, but the McCain tax could cost you thousands, or even your health care. Can you afford it?”

So is Senator Obama telling us the truth, or would McCain’s health care proposal instead increase access, fairness and market competition? Let’s look at the facts.

To understand this issue, one must first understand in simple terms how we arrived at our present situation. Currently, the federal tax code allows employers to deduct the value of health care benefits that they provide to their employees. Notably, there is no cap on the amount that employers can provide and deduct, which means that the greater the benefit amount, the more the employer can deduct from its taxable income. This system originated during World War II, when the federal government imposed strict wage controls upon employers and employees. In order to circumvent these wage caps and compete for more scarce workers, employers increased the fringe benefits that they provided, including health care benefits, which were not taxed. This launched the present system in which health insurance is commonly provided by employers, as opposed to automobile insurance, homeowner’s insurance or other forms of insurance that employees purchase freely. The wage caps ended after World War II, but the federal tax deduction remained and led to the current system of employer-based coverage.

The current system therefore disfavors Americans who don’t receive employer-provided health care for whatever reason, whether due to unemployment, the smaller size of their employer or the fact that they are self-employed. It also benefits higher-income Americans, and those whose larger employers can afford to provide more expensive plans.

So how does John McCain propose to reform this system?

He would allow a $5,000 refundable tax credit for families, and $2,500 for individuals, to obtain health insurance on the private market regardless of their employment status. Because the Joint Committee on Taxation estimates that the value of employer-provided health benefits received by employees earning below $100,000 amounts to between $600 and $3,000, this $5,000 allowance would benefit lower- and middle-income Americans. In other words, it would make the system more progressive, not less.

Senator McCain would also allow these individuals to purchase health insurance plans across state lines, which would reduce costs and increase competition. This is because many states currently impose massive and burdensome requirements upon health insurance providers, such as mandating that they cover such things as cosmetic surgery or wigs. By allowing consumers to freely choose the plan that best addresses their particular needs, this system would increase options and lower costs.

In other words, John McCain’s plan would simply shift the current health care tax deduction from employers to actual individuals, thereby eliminating the advantage enjoyed by higher-income earners and those working for larger companies.

Even Associated Press reporter Nedra Pickler exposes the inaccuracy of Obama’s attack:

“It’s true that McCain doesn’t mention that he would tax health benefits on the section of his Web site where he describes his plan. But the Obama ad also leaves out some important context – the tax credit McCain plans to offer would be more generous than the current tax break, at least for most families for the first several years, according to an analysis by the Tax Policy Center.”

Senator McCain’s plan therefore doesn’t promise more taxes, but rather a more efficient distribution of tax allocations.