Hal Masover | Aug 13 2025 17:00
“The most beautiful words to me” Donald Trump
… “new golden age…” Donald Trump
After the inauguration, Donald Trump said we will be entering a new golden age. He didn’t explain why he thought that. So, it left us to wonder why. What will cause it to be a golden age?
My mind immediately went to the Gilded Age, a time in American history when fortunes were made and conspicuous wealth often celebrated. It was the time of Andrew Carnegie, Cornelius Vanderbilt, John Jacob Astor, and others. It ran from the early 1870s through the early 1890s.
Since President Trump’s favorite president is William McKinley, it seems very likely to me that the golden age he envisions is the Gilded Age of the late 1800s.
McKinley was elected to Congress in 1876 and became president in 1897. But before he became president, he was overwhelmingly defeated in his bid for reelection to Congress in 1891 because of the tariff bill he sponsored in 1890, the McKinley Tariff Act. It was widely unpopular and is credited for Republicans losing 70 seats in the House!
The bill was so unpopular that when the United States entered a depression in 1893, it was known as the McKinley Depression.
But in 1892, McKinley was elected governor of Ohio, and in 1896, despite the extreme unpopularity of his tariff policies, he was elected president, and consistent with his past, he introduced high tariffs. It’s worth noting that in 1901, shortly after winning reelection, McKinley was assassinated by a man who said McKinley didn’t care about the common man.
And that’s probably true. The McKinley Tariff Act conspicuously exempted luxury goods. After enacted, they were credited with increasing the basic cost of living by 25%, and as mentioned above, the depression of 1893 was blamed on McKinley and his tariffs.
So why would Donald Trump find McKinley and his unpopular tariffs so appealing?
I think it might have to do with the kind of tax import tariffs are. They are what’s known as a Regressive Tax. A Regressive Tax is one that taxes lower- and middle-income earners at a higher percentage than higher-income earners. OK, if everyone pays the same tax on say, avocados, for example, how could that be called regressive? Because if you’re just making ends meet, then a higher percentage of your income, in many cases 100% of your income, is spent on essentials. But if you have excess income, then less, in many cases, much less of your income is being spent on essentials. So, any taxes levied on goods, from food to automobiles and everything in between, falls more heavily on low to middle-income households. This is true of sales tax, and it’s true of tariffs.
Tariffs shift the burden of funding the government down the income ladder. And that’s the opposite of income tax. Income tax is a Progressive Tax, meaning the more money you make, the higher the percentage of tax you pay.
The stated goal of the Trump tariffs is the elimination of the Income Tax. While that seems extremely unlikely, any progress in that direction will benefit high-income earners at the expense of low-income earners.
In the 1890s, the McKinley Tariffs, which exempted luxury goods, were responsible for the federal government running a surplus. There are some estimates that today’s tariffs will generate as much as $680 billion in tariffs over the next 10 years.
So, after implementing these taxes, the administration has introduced a bill designed to lower taxes, especially on high-income earners. These two things are directly connected.
And, just in case you missed it, the negotiated tariff deal with the UK specifically exempts Rolls-Royce from tariffs. So yeah, you and I will have to pay higher prices for Toyotas and Volkswagens, but Trump and the 13 other billionaires in his administration won’t have to pay a higher price to buy a Rolls. Put another way, if you buy a Toyota, it helps fund the government, but if Howard Lutnick, the Secretary of Commerce and a billionaire, buys a Rolls, he doesn’t help fund the government. In other words, exactly like the McKinley Tariff Act exempting luxury goods.
From 1965 to 2024, tax rates fell by 47% for the highest earners, and by 36% for the typical middle-class earner.
For 60 years, there has been a downward shift in the burden of funding the government. And since the size of government has grown in every administration, it’s no surprise that when combined with lower tax rates, we have a mind-boggling pile of debt.
In 2018, the wealthiest 500 Americans were worth a combined $3.1 trillion. In 2024, they’re worth a combined $5.6 trillion. An 80% increase. The 2017 Trump tax cuts have been extremely kind to those at the top.
So how do tariffs and Trump’s golden age fit together? By downward shifting the burden of funding the government, we help continue today’s Gilded Age. Today’s mega fortunes are better able to compound their growth with less taxation. Musk, Bezos, Zuckerberg, the Waltons, etc. are today’s Carnegie, Vanderbilt, Astor, et al.
The rich have been getting richer. Tariffs are a tool to help that continue.
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Hal Masover is a Chartered Retirement Planning Counselor and a registered representative. His firm, Investment Insights, LLC, is located at 508 N 2nd Street, Suite 203, Fairfield, IA 52556. Securities offered through, Cambridge Investment Research, Inc, a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Investment Insights, Inc & Cambridge are not affiliated. Comments and questions can be sent to hal@getyourinsight.com. These are the opinions of Hal Masover and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Past performance is no guarantee of future results.