The debate over taxing payments from the Trump Anti-Weaponization Fund has flipped from partisan posturing into a real legal fight, with state leaders proposing a 100 percent levy and legal experts warning the idea may not survive constitutional scrutiny.
Some Democratic officials, including California’s Gavin Newsom, New York Assemblyman Alex Bores, and New York Governor Kathy Hochul, have publicly pushed the idea of treating any payout from the Trump Anti-Weaponization Fund as fully taxable. They frame it as a tax on payments tied to the $1.8 billion settlement that arose from President Trump’s lawsuit against the IRS. That pitch is driven by a desire to hit political opponents, but it raises immediate constitutional and practical questions.
The plan is narrower in appearance than in consequence, because the fund is not limited to January 6 defendants. Anyone who believes they were unfairly prosecuted can apply, and awards will be decided on a case-by-case basis. That undercuts the claim that this is a straightforward revenue measure and opens the door to targeted seizures that could affect ordinary voters, not just political adversaries.
Constitutional experts and tax scholars are already raising alarms about the proposal, calling a 100 percent levy suspect as both a taking and potentially a bill of attainder. Even outlets friendly to the political left have described the move as legally dubious, noting the unusual nature of a state effort designed explicitly to zero out a specific class of payouts.
State lawmakers are working together and sharing legislative text in hopes of levying a 100 percent income tax on any payments from the $1.8 billion fund, created through the settlement of President Donald Trump’s lawsuit against the IRS. And their governors are taking interest, with California Gov. Gavin Newsom endorsing the proposal Wednesday and New York’s Kathy Hochul signaling Thursday she’d be open to it as well.
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https://x.com/politico/status/2060287624250839202
But it’s also an open question if blue-state governors and legislators, in their zeal to hit back at Trump, have crafted policies that won’t stand up in court.
Joseph Bishop-Henchman of the National Taxpayers Union Foundation stressed that the judiciary generally defers to lawmakers on tax matters, but that judges could have a variety of questions about whether a 100 percent levy on fund payouts passed constitutional muster.
“It would be an unusual thing for states to do, which normally would cut against them,” Bishop-Henchman said. “But the entire issue is also unusual.”
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Taxes that large could be ruled bills of attainder, which are effectively laws that bypass the courts to target specific groups. But Bishop-Henchman noted that the Supreme Court has only twice struck down state laws for that reason, neither of which happened in the last 150 years.
Judges could also examine whether taxes targeting fund disbursements were confiscatory or exceeded constitutional bans on excessive fines. The judiciary has struggled to articulate when big tax rates bleed into the seizing of property, Bishop-Henchman said, noting that the courts have blessed top federal income tax rates north of 90 percent.
“But it would be hard to argue that a 100 percent tax is anything other than a taking,” he said.
Corey Husak, director of tax policy at the left-leaning think tank Center for American Progress, said states were within their authority to tax “anti-weaponization” awards, just as they would unemployment insurance and other government payments. But because the agreement establishing the fund does not explicitly require the payments be made public, he said, states may have a hard time collecting taxes on them.
Adopting a policy that amounts to seizing an entire award invites lawsuits and expensive litigation for state governments, and taxpayers will be the ones footing the legal bills. Courts will have to weigh separation-of-powers issues, due process, and whether a targeted zeroing out of payouts crosses the line into punishment without trial.
Beyond courtroom risk, the practical hurdles of tracking and taxing confidential settlements are real. If payouts are structured or kept private, states will struggle to enforce a 100 percent levy without overreaching subpoenas or intrusive reporting rules. For citizens, the reality is simple: a state that embraces punitive, confiscatory policy gives people a clear reason to consider relocation to a jurisdiction that respects property and due process.
Legal observers note that blanket efforts to strip value through tax mechanics can collide with long-standing doctrines that protect against confiscation and bills of attainder. The debate isn’t only academic; it will play out in courtrooms and could set precedents about how far states may go when politics drives tax policy. That point was underscored sharply by Treasury Secretary Scott Bessent, who told reporters, “There’s no cure for stupid.”
This proposal is political theater dressed up as tax policy, and it reveals an appetite among some officials to weaponize state power against political foes. Framing confiscation as taxation doesn’t change the effect: stripping awards to punish people based on perceived political alignment is a dangerous path for any government. The courts will have to decide whether such a tactic is lawful, but voters and taxpayers will pay the price while those fights unfold.
