Are you aware that… The US came out of the 1919-1920 depression when Secretary of the Treasury Andrew Mellon got Congress to do the following: repeal the excess profits tax, lower the corporate tax, and cut in half the personal income tax. Mellon convinced Harding and Coolidge to also cut expenditures for every department of the federal government. Cut spending, cut taxes!
The net result was a federal budget that had surpluses every year of the decade, a substantial portion of the national debt paid off and a booming economy. Why? Many democrats feared at the time that by cutting taxes, government revenues would decrease; however, Mellon argued these measures would increase government revenues and benefit the average worker and consumer also. He stated that if you put more money into the pockets of people, they would spend it creating demand in the private sector of the economy. This would then cause corporations to expand to meet the demand. As a result of increased demand, there would be more investments, higher productivity, more jobs and lower prices. He was absolutely correct. As individual earnings increased and corporate profits increased, government revenues went up with the prosperity. In addition, by the end of the decade the rich paid a higher proportion of the total tax bill than they had in 1920.