Blue States Nuke Trump Payouts

Democrats in blue states just discovered a way to “cancel” a federal payout without touching a single line in Washington’s budget: tax it at 100 percent.

Story Snapshot

Democratic lawmakers in multiple blue states are pushing bills to slap a 100 percent state tax on payouts from Trump’s $1.8 billion Department of Justice Anti-Weaponization Fund.^[1]^[2]
Supporters pitch the tax as a way to stop residents from being “enriched” by what they call an illegal political slush fund.^[2]
The fund itself comes from a federal settlement over alleged Internal Revenue Service tax-return leaks and is supposed to compensate victims of “weaponization” and lawfare.^[3]
Conservatives see the move as weaponized tax policy: using state power to nullify a disfavored federal program while pretending to respect the rule of law.

Blue States Try to Kill a Federal Payout Without Touching Washington

State Democrats in New York, California, Illinois, New Jersey, and other deep-blue enclaves are racing to do something rarely tried in modern politics: use a state tax code to strip a federal payout down to zero.^[1] Their target is the Department of Justice’s Anti-Weaponization Fund, a $1.776 billion pot of money created under a settlement of President Donald Trump’s lawsuit over leaked tax returns.^[1]^[3] Rather than wait for Congress or the courts, these states want to make any check that lands in their residents’ mailboxes effectively worthless.^[1]^[2]

Politico reports that Democratic lawmakers are actively trading bill language and strategy to impose a 100 percent income tax on any payment from the fund.^[1] New York Assemblyman Alex Bores introduced what he calls the “Anti-Insurrectionist Act,” designed to ensure that if a New Yorker taps the fund, the state takes every penny back through taxation.^[2] Similar proposals are being jammed into budget packages in California and Illinois, with sponsors boasting that they can move before legislative sessions adjourn.^[1]^[2]

Inside the Anti-Weaponization Fund the States Want to Erase

The Justice Department’s own announcement describes the Anti-Weaponization Fund as part of the settlement in President Donald J. Trump v. Internal Revenue Service, created to handle claims from people who say they were victims of government “weaponization and lawfare.”^[3] A five-member commission appointed by the Attorney General can award both formal apologies and monetary relief to claimants, with no stated partisan requirement.^[3] The money comes from the federal Judgment Fund, a perpetual appropriation used to pay legal settlements, and any leftovers revert to Washington when the program ends in 2028.^[3]

Supporters of the fund argue that if bureaucrats and prosecutors abused their power for political reasons, the government owes real restitution, not just a press release.^[3] That is a deeply conservative idea: government does not get to wreck your life and then walk away scot-free. Critics counter that the design of the fund, including a commission chosen by a Trump-appointed Attorney General and limited public reporting, makes it ripe to favor January 6 defendants, close allies, and sympathetic media personalities while taxpayers pick up the tab.^[1]^[2]^[3] A federal judge has already temporarily blocked payments while the legality of the arrangement is challenged, underscoring how unsettled the entire scheme remains.^[4]

Taxing “Slush Fund” Money to Death: The New York and California Playbook

New York’s proposal is the most explicit about its intent. In a public post, Assemblyman Bores told constituents that if they take money from this “illegal slush fund,” the state will tax 100 percent of it, and if they “stormed the Capitol” and still get paid, “too bad, we’re taking it.”^[2] State Senate Deputy Leader Michael Gianaris filed a companion bill stating the purpose clearly: make sure no resident of New York is “enriched by what is, in substance, a publicly-funded political payout.”^[2]

The DOJ confirmed Trump’s $1.776B “Anti-Weaponization Fund” is real, funded through a federal settlement over leaked tax returns. Democrats and watchdogs are now scrambling to block or heavily tax payouts. #Trump #GavinNewsom #AntiWeaponizationFund #DOJ pic.twitter.com/SuNqVGBXWh

— Matthew Brady (@mattbrady775) May 28, 2026

California Governor Gavin Newsom has signaled support for the same concept, reportedly vowing that residents who benefit from the Anti-Weaponization Fund will see the state claw back the entire amount.^[1] Illinois and New Jersey Democrats are working on their own versions, with the open aim of making the fund politically toxic and practically useless within their borders.^[1]^[4] Progressive tax advocates argue that states routinely tax federal benefits such as unemployment checks and that nothing stops them from treating these payments the same way.^[1] That may be technically true, but the targeting is so surgical that it looks less like neutral taxation and more like punishment dressed up as fiscal policy.

Where Constitutional Limits and Common Sense Collide

Legal scholars quoted in coverage warn that a 100 percent tax tied to a disfavored group of recipients walks right up to the line of what the Constitution allows.^[1]^[4] Courts may treat such a levy as a confiscatory measure or an excessive fine, not a legitimate tax.^[1] There is also the specter of a “bill of attainder,” a law that singles out a class of people for punishment without a trial. When lawmakers brag about going after January 6 defendants and Trump allies specifically, they hand challengers ammunition.

From a conservative standpoint, the problem goes deeper than doctrine. When a state uses its tax code to erase a federal settlement it dislikes, the message is clear: your rights and remedies depend on who runs your statehouse. That logic cuts both ways. Red states could just as easily target future Democratic initiatives, from student-loan relief to climate payouts, with bespoke surtaxes that vaporize benefits at the border. A country that accepts retaliatory tax games like this will not stay united for long.

What This Fight Reveals About Power, Not Just Policy

This clash is less about one fund and more about how far political actors are willing to go to control who gets help and who gets punished. The Anti-Weaponization Fund itself may be flawed, politicized, or even doomed in court. Yet the blue-state response does not fix those flaws; it tries to out-weaponize the alleged weaponization by turning state tax systems into ideological enforcement tools. That undermines equal treatment, inflames division, and teaches future politicians that if you cannot repeal a program, you can just tax it out of existence.