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Unleash Prosperity Hotline – Weekend Edition
Issue #1261
05/09/2025 – 05/11/2025
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1) Trump's Almost-Great Trade Deal
The Trump/U.K. trade deal is a much-needed step towards eliminating abusive trade practices on the other side of the pond. It also shows, a third of the way through the 90-day pause, that there is an off-ramp from the suspended tariffs.
Nevertheless, it fails to address the digital services tax - or DST - that is one of the most discriminatory taxes the Brits and Europe have imposed on U.S. industry. The cost to the American tech sector is expected to be more than $1 billion (£800 million) this year alone.
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As our friends at NetChoice point out: "The UK's taxes on US tech firms are a targeted attempt for them to profit from the success of American businesses." They're right.
The tax all but exempts British and Euroland firms - partly because they are still in the dark ages of tech progress - while targeting Meta, Google and other leading firms by imposing multiple billions in confiscatory taxes. As the Trump White House put it, the DST is picking America's pockets.
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The preliminary trade deal has some flowery language about working together on a U.S.-UK tech partnership. That seems like a pipe-dream if these tech taxes stay in effect.
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2) Why Congress Should Fire the JCT
The Joint Committee on Taxation just released the most absurd revenue estimate in its entire inglorious history. It now projects that any attempt to eliminate the death tax would cost more than $600 billion over 10 years.
This could hardly be further from reality. First, the expected revenue loss is nearly four times what the tax has raised over the past 10 years. How can repealing a tax lose more revenue than the tax raises?
Second, many studies, including our own ([link removed]) , find that the impact of the death tax is to reduce capital formation and business investment. That slows the economy and reduces expected federal revenues. The JTC score estimates ZERO economic impact and increased income tax revenues from eliminating the death tax.
Over the past 100 years the death tax rate has been as high as 80% and as low as 20%, but the revenues have always come in at close to a measly one percent of total federal tax revenues. All this economic damage for a tax that is fiscally irrelevant.
This chart shows the historical top estate tax rate and the percentage of federal revenue raised by the tax:
Senator John Thune was first elected on a promise to repeal the death tax back in 2004. He'll have to fix the Joint Tax scoring process if he ever wants to deliver on that promise to stop making dying a taxable event.
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3) Just Eliminating All the Federal Fraud Would Save $5 Trillion
The media is shouting from the rafters that those mean Republicans are going to cut Social Security benefits, shut down rural hospitals, take food out of the mouths of starving Africans, and take Sesame Street off the air with their budget plan.
Take a Valium.
No. The most recent GAO report finds up to half a trillion dollars per year in fraud - and says that is likely a lowball estimate:
The federal government loses between $233 billion and $521 billion annually to fraud, according to GAO's government-wide estimates based on data from fiscal years 2018 through 2022. Additionally, federal improper payment estimates have totaled about $2.8 trillion since FY 2003--and the actual amount may be significantly higher because this is based on a small number of programs that report these numbers. For instance, 16 agencies reported a total of about $162 billion in improper payments across 68 programs in FY 2024. Most (75%) of these improper payments were concentrated in 5 areas.
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Among GAO's recommendations:
Agencies should ensure that funds aren't paid to ineligible beneficiaries or providers. For example, Medicaid should ensure that claims are not paid to ineligible medical providers, including those who have suspended or revoked medical licenses.
Ya think?
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4) Warning To GOP: This Is What Happens When Conservatives Act Like Liberals
Australia's left-wing government won a decisive re-election over the weekend. US media outlets blamed the conservative opposition's defeat on antipathy towards Donald Trump and U.S. tariffs.
That’s partly true, but Trump was a minor issue in the race, and the 10% tariffs imposed on Australia were the lowest of any country. The real reason for the defeat of the rightist Liberal Party was that it stopped being conservative.
The Labour government ran on a cut in the lowest tax rate from 16% to 14%. It was denounced by Liberal (conservative) leader Peter Dutton as a "cruel hoax," and he promised to repeal it if elected Prime Minister. Raise taxes on the poor is hardly a winning message.
The Liberal alternative was a temporary cut in the nation's gasoline tax and a one-time "cost of living" rebate. No pro-growth income tax cuts were offered! Pitiful.
On other issues including radical climate change, the Liberals also abandoned the field. They wouldn't even denounce "net zero" lunacy.
James Allan, a law professor at Queensland University, said their attitude on the major issues of the day was: "We abjectly and permanently surrender."
On Net Zero carbon emissions he summed up their view as: "We'll also genuflect to the impoverishing renewables gods, just a couple of decades slower and less sincerely."
This mamby pamby agenda was so uninspiring that even Peter Dutton, the Liberal Party leader, lost his own seat. And deservedly so.
Australia needs an "Australia First" candidate.
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5) The Data Is In – Giving People Money Doesn't Solve Poverty
Universal basic income (UBI) is an anti-poverty idea fashionable among progressives - and even a few conservatives. Just give cash payments without restrictions to people below the poverty line.
Our friends at Kite & Key media have produced a nifty video summarizing a comprehensive study from OpenResearch, an organization backed by OpenAI CEO (and UBI supporter) Sam Altman. It took 3,000 lower-income people and gave two-thirds of them $50 a month and one-third of them $1,000 a month.
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Three years later, the study found the people who got more money actually ended up worse off. They worked fewer hours and stayed unemployed longer than the people who only got $50. And that most of their newly found free time was just spent on "leisure."
To top it off, the people who received $1,000 a month actually ended up with less money in the bank than those of the people who got $50. They spent virtually all the extra money -- and racked up more debt than the people who received smaller amounts.
The evidence is clear: Giving people free money is no way to solve long term poverty.
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6) The New Pope's First Decree
Spoken like a TRUE Chicagoan:
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