Dems Plot 100% Tax Grab on Anti-Weaponization Fund Payouts

Democrats are trying to make sure nobody actually keeps money from President Donald Trump’s $1.8 billion “Anti-Weaponization” fund. The new strategy: tax the payouts into oblivion.

The push began in Congress and quickly spread to Democratic-led states, where officials are lining up behind proposals to hit the fund with a 100% tax. They argue the money could flow to Trump allies and people tied to the Jan. 6, 2021, Capitol riot.

Sen. Ron Wyden framed the fund as a raid on taxpayers. “Congress must do whatever it takes to prevent Donald Trump from stealing $1.8 billion from the American people to fund right-wing violence and handouts to insurrectionists,” Wyden said in a statement. “This money doesn’t belong to Donald Trump, it belongs to the taxpayer.”

Democratic Rep. Mike Thompson of California introduced the federal bill, titled the “Stop Letting United States Heads Funnel Unauthorized Nontransparent Dollars Act of 2026,” or the SLUSH FUND Act.

The bill would place a 100% tax on payments from the fund. Anyone who willfully tries to avoid the tax could also face a 50% penalty.

BREAKING: California will impose a 100% tax on payments distributed from Trump’s Jan. 6th “slush fund.” pic.twitter.com/IIfPUQrbuc

— Governor Newsom Press Office (@GovPressOffice) May 27, 2026

California Gov. Gavin Newsom signaled that his state may take its own swing at the payouts.

“One thing that I think we’re going to try to do, with your support, is tax 100% anyone from California that receives any of those funds,” Newsom said during a press conference on Wednesday.

“And that’s an action the state of California can take. It’s an action we look forward to taking.”

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Newsom did not give a timeline for when California could start imposing the tax. His press office called the fund a “Jan. 6th slush fund.”

New York Democrats are pushing a similar idea. Alex Bores, a state lawmaker who is running for Congress, introduced legislation he calls “the Anti-Insurrectionist Act” that would tax payouts from the Trump settlement fund at 100%.

“If you storm the Capitol and you take from this slush fund, too bad, we’re taking it,” Bores remarked.

He pressed the same message on X. “It’s simple: If you’re a New Yorker who takes from Trump’s illegal January 6th slush fund, NY will tax 100% of it,” Bores wrote.

I just introduced the Anti-Insurrectionist Act in NY. It's simple: If you're a New Yorker who takes from Trump's illegal January 6th slush fund, NY will tax 100% of it. pic.twitter.com/9vg5EKPybZ

— Alex Bores (@AlexBores) May 26, 2026

Gov. Kathy Hochul also said she had no issue with consequences for people who take the money.

“I have no problem with there being consequences for people who accept that money,” she commented at a press conference.

“If there’s a tax that goes into a fund that helps New Yorkers, it might be a good way to go,” she said in reference to “a slush fund.”

“That kind of money — it’s obscene to be setting aside to award people who have committed crimes and injustices, including assaulting police officers on Jan. 6,” she added.

New York lawmakers are pushing to move the bill forward before the legislative session ends June 4.

Wisconsin Democrats joined the effort Wednesday, when state Senate Minority Leader Dianne Hesselbein introduced a proposal to tax the payouts at 100% and route the money into the state treasury.

“January 6th was illegal. It was awful. It was a stain on the history of the United States. And to say that anybody should get paid for doing that reckless and awful things, it’s reprehensible,” Hesselbein remarked.

Her proposal has already drawn support from Democratic gubernatorial candidates Joel Brennan, Mandela Barnes and Secretary of State Sara Godlewski.

Illinois Democrats are preparing their own version. State Rep. Bob Morgan, D-Deerfield, said on the House floor Wednesday that similar legislation was being introduced and that he wanted the language folded into the final state budget.

“The US Department of Justice created what they’re calling the anti-weaponization fund – or as I call it the Jan. 6th and Insurrection Fund,” Morgan said.

“Anybody who is enriching themselves by participating in part of an insurrection should definitely be taxed for that potential payout.”

Morgan said Illinois could use the tax to erase any payout received by a state resident through the person’s state income tax return.

He also pointed out that it could help the state recover part of the federal funding cuts he said have hit Illinois.

“We are looking for opportunities to make sure our values are reflected in this tight budget,” Morgan stated.

Pennsylvania State Rep. Melissa Shusterman, D-Chester, also proposed a state-level tax Thursday that would treat “any payments made to state residents from the Anti-Weaponization Fund as 100% taxable income in Pennsylvania.”

Shusterman argued the state needs a backup plan if the fund goes forward.

“Many households are struggling with making ends meet between increased grocery, gas, housing, utility, and other bills,” Shusterman wrote in a memo.

“Taxpayer money should be used to benefit taxpayers; not for select individuals who are seeking political payouts from the Anti-Weaponization Fund.”

Connecticut Senate Majority Leader Bob Duff said Thursday that his state would also look for ways to claw back the money.

“The Trump regime just handed $1.8 billion in taxpayer money to the same people who beat police officers and stormed the United States Capitol,” Duff said in a statement.

“Connecticut is not going to let a single one of our residents profit from that corruption. If you filed a claim with Trump’s slush fund and collected a check, we are going to explore every legal option available to take every penny of it back. We will not allow this state to be a safe harbor for insurrectionist windfalls.”

The Trump administration has argued the fund is not partisan and is not restricted to Republicans, though it has not ruled out payments to people involved in the Jan. 6 riot.

Trump granted a “full, complete and unconditional pardon” to people convicted of Jan. 6-related offenses on the first day of his second term.

The fund was announced earlier this month by the Department of Justice as part of a settlement with the IRS.

Trump agreed to drop his $10 billion lawsuit over his leaked tax returns, after previously suing his own administration in January for damages tied to the leak.

The $1.776 billion payout is designed for people who say they were targeted by former President Joe Biden’s Justice Department and Democrats as victims of “weaponization and lawfare.”

Critics have described it as a taxpayer-backed fund for Trump’s allies, including possible Jan. 6 participants.

Asked about Newsom’s proposal at a White House press briefing, Treasury Secretary Scott Bessent dismissed the idea.

“There is no cure for stupid,” Bessent shot back.

On Friday, a U.S. District Judge Leonie Brinkema  blocked the DOJ from “taking any further action pursuant to the creation or operation” of a $1.778 billion “Anti-Weaponization Fund.”