There is a temporary increase in tax revenues when taxes on the highest earners is cut, but that bulk comes from taxes collected from those who spend the most: The Middle- and Working Class. When demand begins to fall, recessions loom over the country. There is an ideal income tax level where both demand for goods and services remains high, and where tax revenues also remain high. I believe that is somewhere between the high of 91% marginal tax rate in the 50s and the 70% marginal tax rate in the 70s. Both eras were times of prosperity of the American people, and for the middle class in particular.

Democrats have not been innocent in these happenstances. They are also in collusion with Big Business to crush the middle class and grab all the goodies for themselves and their benefactors. Mostly, the Democrats have forgotten why they are supposed to be the party of "the rest of us". While the Republicans have both hands in the pockets of the taxpayers, Democrats have one hand in the pocket of the taxpayer and the other in the pockets of lobbyists for the status quo. Remember the story about "the Goose that laid the Golden Egg"? The greedy weren’t willing to wait for the next egg to be laid. They had to kill the goose and cut her open to find out where the eggs were coming from. The eggs stopped coming, of course, and that is the moral of the story.
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Jimmy Carter was a bad president, but for other reasons entirely.

1. The law of diminishing returns. Lowering the highest marginal tax rate from 70 -39 percent will create more investment. Lowering it from 39-35 (2001-today) did not.

2. New economic situations that didn’t exist in Reagan’s Era

It is quite convienient that your graph (whose link doesn’t work) stops at 1999. Further tax cuts – especially with free movement of capital (something that was limited during Reagans era) – has been shown to not have the same effect. Nowadays, for every dollar in tax cuts 85 cents is shipped overseas in investment rather than staying here (like it did during Reagan/Bush/Clinton). So the dollar in tax cuts actually only gets the investment return on the 15 cents that stays here. Nevermind the incongruent interest rates on government paper between say Asia and the US, that was not there in Reagan’s Era. (Who would have invested in Indonesian or Thai bonds in 1985? an idiot.)

In general we like rules that work all the time. Milton Friedman, a monetarist, once said that Keynes’ theories didn’t work all the time because the rules he assumed were not "general" but specific to his time and place. Late in life, Friedman realized the same was true for his own "general rules" from the 1960s and 1970s and that they were incorrect as we entered the new globalized era with more demand for capital OUTSIDE of the first world.

Unfortunately, this new Globalized era has not been studied enough to have a new system of "general rules" that work in it.

Free Movement of Capital
Floating currencies
Floating interest rates
Three or four level international economy (1st, 2nd, 3rd and 4th worlds).

In Reagan/Bush and most of Clinton’s era there were only the First and Third World (newly independent Communist nations were largely third world).

There is now more demand for capital in places that aren’t US/Europe/Japan.

This is something that Friedman had never accounted for and did not exist in the years of your graph.
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That is like asking al qaeda to do a study proving that radical islamists are not responsible for 911.
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The liberal nightmare…getting your whole pay check to spend on goods and services. They just don’t see it. Tax people more, they cut back on things and if they own a business they cut back on jobs.
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The actual facts don’t support con theories no matter how hard you try to make it seem that way.
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