As seen on Appendix A (U.S. Joint Economic Committee 1982) because of the tax cuts, personal tax revenues increased substantially during the 1920's. From $719 million in 1921 to $1,160 million in 1928, an increase of more than 61%. Also this was a period of no inflation. .
Again in the 1960's President Kennedy proposed a series of tax rate reductions dropping the top rate from 91% in 1963 to 70% by 1965. Appendix B (U.S. Joint Economic Committee 1982) The Kennedy tax cuts helped trigger the longest economic expansion in America's history. The economy expanded by more than 42%. Tax revenues grew dramatically as the tax burden on the rich was increased by 50%. Remember when taxes are cut, the taxpayers with money will feel free to invest and as a result will make more money.
Under President Reagan our nation was once again treated to tax reductions. The top tax rate was cut from 70% to 28% by 1988. Appendix C (Budget of the U.S. Government 1997) During the Reagan economic boom, economic growth averaged almost 4% a year over 7 years. Revenues, once again, to the government increased by more than 54% through 1989. Contrary to conventional wisdom, it was the "rich" who paid the additional taxes (Mitchell).
When the investors of this nation are free to keep more of their own money they will inevitably try to find ways to invest it to make a profit. This in turn creates more jobs and increases revenue to the government by having more taxpayers.
Demonstrated below is the effect that layers of taxation can have on investors. Between personal income taxes, corporate income taxes, capital gains taxes, and estate taxes, a single dollar of investment income can be subject to as many as four layers of tax in America.
"A taxpayer has $100 of income and must decide what to do with it. He can consume the $100, spending it and receive almost $100 on goods and services minus taxes" (Mitchell). "Or he can invest in the stock of a start-up company with the potential to provide new jobs for the community and produce goods consumers desire.
