Unleash Prosperity Hotline – Weekend Edition
Issue #1261
05/09/2025 – 05/11/2025
New to the Hotline? Click here to subscribe–it's free.

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.

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.

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.  

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,  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.

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.

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?