moneyMath is hard. So is arithmetic. During the first presidential debate in Denver last night, President Obama repeatedly accused Mitt Romney of wanting to implement a $5 trillion tax cut.

“Governor Romney’s proposal, that he has been promoting for 18 months calls for a 5 trillion dollar tax cut – on top of $2 trillion of additional spending for our military. He’s saying he’s going to pay for it by closing loopholes and deductions … If you are lowering the rates the way you described, Governor, then it is not possible to come up with enough deductions and loopholes that only affect high income individuals to avoid either raising the deficit or burdening the middle class. It’s math. It’s arithmetic.” 

It’s almost like President Obama thinks there’s a limited amount of wealth in the world. Newsflash: Like love, wealth is not a pie that must be divvied up and portioned out until it’s all gone.

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We don’t know how well Barack Obama did in his history classes, since he refuses to release his college transcripts, but I’m going to go out on a limb and guess not well. If he had actually studied history, he might have come across some interesting information about how previous presidents have raised revenue.

The very best way to raise revenue for the government is to lower taxes. I know, on the surface it doesn’t seem to make sense. Shouldn’t charging people more result in higher revenues?

Not really. History repeats itself, and by looking at what has happened in the past, we should be able to predict what will happen in the future. In the 1920’s, tax rates of more than 70 percent disgusted then Treasury Secretary Andrew Mellon. In 1926, Mellon and President Coolidge reduced taxes on the rich to 25 percent.

Tax revenue subsequently went up.

The same thing happened under John F. Kennedy, Ronald Reagan, and George Bush.

An amazing thing happens when the government doesn’t punish success: People are inclined to work harder and earn more. It’s math, Mr. President: A small percentage of a large amount is a lot more than 100 percent of zero.

When you tax the rich dry, they stop investing in productive, taxable business, and take their money to tax-exempt securities.  After all, they didn’t get rich by being stupid.

Mitt Romney understands that reducing the tax burden on high earners is the best way to get America back to work. The middle class can’t afford four more years of Barack Obama’s “help.”

 

Image via AMagill/Flickr