May 29, 2026
California Gov. Gavin Newsom is proposing a 100% tax on any Californian who gets a payout through President Donald Trump’s new $1.8 billion Anti-Weaponization Fund.
And he’s inspired others to follow suit — with similar proposals popping up in New York, Illinois, and Connecticut.
Advertisement
“There’s widespread, bipartisan agreement that this is bald-faced corruption at its worst,” New York State Sen. Mike Gianaris said of the Anti-Weaponization Fund.
So what does the fund have to do with taxes? Dubbed Trump’s “slush fund” by critics, it’s part of a settlement in which Trump, his sons Donald and Eric and the Trump Organization agreed to drop their suit against the U.S. Treasury and IRS.
In return, the fund allows the President to tap taxpayer dollars to pay out anyone he deems to have suffered “weaponization and lawfare” at the hands of the U.S. government and its legal systems.
It would allow Trump to pay out 1,500 Jan. 6 rioters who stormed the Capitol and were charged with federal offences — including those convicted of violence and seditious conspiracy. Trump has already pardoned rioters. This would give them cash rewards.
In defiance, Gov. Newsom said his state would tax such payouts by 100%.
“That’s an action the State of California can take,” Newsom said. “It’s an action we look forward to taking.”
Advertisement
But can lawmakers impose such an excise tax? Here’s a look at the growing pushback against Trump’s fund and whether a countermeasure like a 100% excise tax could succeed.
Blowback against Trump’s slush fund
Multiple legal experts have declared the Anti-Weaponization Fund illegal.
On May 27, a group of 35 former judges filed a court case against Trump, saying that the nearly $1.8 billion settlement wasn’t mentioned when Trump withdrew his suit against the IRS. The court never got to judge the merits of Trump’s case.
Two police officers who held off rioters during the Jan. 6 insurrection have also launched challenges.
Meanwhile, Newsom is one of a number of lawmakers hoping to use tax law to strike back, and the idea now has now taken hold at the federal level.
On May 21, Senators Ron Wyden and Chuck Schumer introduced the Stop Letting United States Heads Funnel Unauthorized Nontransparent Dollars (SLUSH FUND) Act, which would tax Trump fund payments at 100% at a federal level.
Advertisement
If both federal and state laws go into effect, payment recipients could end up owing more in tax than they were given.
Must Read
- You can now build wealth like a landlord for as little as $100 — and no, you don't have to chase down rent or take 3 A.M tenant calls
- Goldman Sachs used to hoard prime real estate deals for the ultrarich. Two ex-analysts just opened the door for $250
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Could these 100% excise taxes go through?
There’s never been a 100% income tax successfully instituted in the U.S, and these laws are likely to be met with pushback. But they’re more legal than they might seem at first glance.
States can’t tax the federal government directly, but these proposals don’t; they tax state residents, which is allowed.
The Fourteenth Amendment says that “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States,” which could be used to limit a state’s tax capabilities.
But, according to Cornell Law School’s Legal Information Institute, “the Court will refrain from condemning a tax solely on the ground that it is excessive.”
Depending on court interpretation, that could mean that the proposed state and federal 100% excise taxes are allowed.
Even if Newsom’s idea doesn’t pan out, Anti-Weaponization Fund payments would be taxable. Not only would recipients have to pay tax on payouts, but according to Politico, Trump himself may face tax liability for payouts under gift tax. This could add up to hundreds of millions of dollars.
You May Also Like
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
- Robert Kiyosaki issues grim warning for baby boomers. Many could be ‘wiped out’ and homeless ‘all over’ the country. How to protect yourself now
Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
