Experts Say Blue States Can Stop Paying Federal Taxes. There’s Precedent
If we could use nullification for people to get stoned, why can’t we use it to protect human rights and stop fascism?
Author's note: this is an update on a previously published article. It includes expanded information to address specific questions that have arisen since it was first shared. You can also find our booklet “Opposition Guide to Tax Warfare” listed for $0.00, by clicking on this sentence. Also, all references/citations are listed at the end of this article.
Washington State House Bill 2712 of 2010 was titled the “Washington state sovereignty and federal tax escrow account act of 2010.” The legislation proposed creating a Federal Tax Escrow Account in the state treasury. Instead of employers forwarding collected federal taxes to Washington, they would send them to the state. The state would hold the money in escrow. A legislative panel would review federal spending for constitutional compliance. The state would release only the portions deemed constitutional. Funds designated for unconstitutional spending would either support programs currently funded through federal allocations or return to taxpayers directly.
The bill died in committee without hearings. It was sponsored entirely by Republicans during Democratic trifecta control of the state legislature and the Obama administration. Opponents called it obviously unconstitutional under the Supremacy Clause and pointed to McCulloch v. Maryland, which established that states cannot interfere with federal functions. The bill wasn’t expected to pass and served primarily as symbolic Tea Party opposition.
But that was 2010. Blue states in 2025 face fundamentally different circumstances.
Federal spending conceals systematic constitutional violations funded by blue state revenue. California remits over $400 billion annually in federal withholding taxes. That money pays for ICE enforcement actions in Los Angeles conducted over state objections. New York sends hundreds of billions that fund DOJ prosecutions targeting Democratic officials. Illinois revenue deploys National Guard units to Chicago despite the governor’s explicit refusal to cooperate. Federal agents conduct immigration raids without warrants or probable cause in Democratic cities, violating active court injunctions. The administration ignores judicial orders whenever they don’t agree with them. Blue states finance an apparatus that occupies their own territory, corruptly prosecutes their own officials, and violates their own constitutionally codified authorities.
States control the mechanism to stop it.
Employers across blue states withhold federal taxes from worker paychecks every year and send that money straight to the IRS. State legislatures can order them to stop. Pass a law requiring every employer in the state to redirect federal tax withholdings to a state escrow account instead of D.C. The money then sits in state control. Does the federal government want access? Then they can submit to independent audit proving funds will be allocated according to congressional appropriations, not redirected through executive action. Demonstrate spending complies with constitutional limits and active court orders. Prove compliance with anti-commandeering doctrine and due process protections. Pass the audit, get the money. Fail it, the billions stay in escrow until constitutional compliance can be verified.
The escrow mechanism also functions as anti-corruption compliance oversight. States aren’t refusing to remit taxes arbitrarily. They’re establishing accountability for an executive that operates above constitutional limits. When the administration runs pay-for-pardon schemes, accepts private jets from foreign governments in violation of the emoluments clause, and uses federal resources for quid pro quo arrangements, states have authority to demand verification that tax dollars aren’t financing corruption before releasing funds.
The inspection criteria require constitutional compliance. Federal spending must follow congressional appropriations, not executive redirection. Operations must stay within statutory authorization. Enforcement must respect due process and court orders. These criteria aren’t arbitrary. They’re baseline constitutional requirements the administration currently violates with blue state revenue. Stop using our resources to do your dirty work.
Meet the standards, and the funds release. Refuse, and hundreds of billions sit in state accounts each month to accrue interest that benefits the good folks of whichever states step up.
Legal arguments about constitutionality don’t determine whether this strategy works. Enforcement capacity does. The federal government cannot physically enforce against coordinated states. Whether the Supreme Court rules this constitutional or unconstitutional doesn’t change that operational reality. Constitutional objections don’t determine success or failure. Enforcement capacity determines success or failure.
Cannabis legalization violates explicit federal law. The Controlled Substances Act made marijuana illegal nationwide. Federal courts didn’t give states permission to legalize. States did it anyway. When enough states stopped enforcing federal drug law, federal authorities lacked resources to enforce independently.
If we could use nullification for people to get high, why can’t we use it to protect human rights and stop fascism?
REAL ID followed identical dynamics. The law passed in 2005 with mandatory implementation by 2008. Twenty-five states passed legislation explicitly opposing the mandate, citing federal overreach and Tenth Amendment violations. The federal government extended the deadline in 2008. Then extended it again in 2009, 2011, 2013, 2014, 2020, 2021, 2022, and most recently to 2027. Nineteen years of extensions because the federal government couldn’t enforce when enough states chose not to participate.
Cannabis and REAL ID demonstrate what happens when states coordinate on action the federal government calls illegal. Enforcement becomes unfeasible. The federal government lacks capacity to arrest state tax commissioners across 15 states while maintaining tax collection systems, cannot seize state treasuries by force, and cannot withhold federal funding from net contributor states that send more to Washington than they receive. The enforcement mechanisms don’t exist for this scale of coordinated resistance.
Some will argue that tax escrow accelerates institutional breakdown in ways that harm the populations blue states aim to protect. The concern deserves direct engagement because it rests on a premise that no longer reflects reality. The argument assumes functional institutions that coordinated resistance might damage. Those institutions already failed. A president led a violent attempt to overturn an election, faced no prosecution for four years, then won the presidency again under questionable circumstances.
The premise that we can vote our way back to previous norms misunderstands what norms are and how they function. Norms aren’t legislation that remains enforceable after violation. They’re behavioral expectations that cease to constrain the moment enough powerful actors demonstrate willingness to ignore consequences. When someone breaks a norm and faces no consequences, that norm no longer exists as a governing constraint. You cannot comply your way back to a world where the other side follows rules they’ve already demonstrated they’ll violate whenever advantageous. Every “line in the sand” that produced no consequences confirmed that no lines exist.
Republicans now have every incentive to lie, cheat, and steal so they can avoid accountability or consequences, while simultaneously destroying every enforcement mechanism that was previously relied upon.
Institutions already collapsed. What remains is whether to acknowledge that collapse and build alternative accountability mechanisms, or continue pretending institutions still function while they’re systematically weaponized against you. Tax escrow creates consequences for executive lawlessness where none currently exist.
Single state action gets isolated and crushed. However, States acting simultaneously representing the majority of federal revenue creates one of two scenarios, both superior to current circumstances. Either the administration complies with constitutional requirements to access hundreds of billions in blue state revenue, or blue states retain that revenue and stop financing federal operations conducted against their explicit objections. The administration cannot simultaneously violate existing agreements and continue extracting blue state funding.
The coordination infrastructure already exists. Governors Safeguarding Democracy launched November 13, 2024, founded by Illinois Governor JB Pritzker and Colorado Governor Jared Polis to coordinate state resistance strategies. The organization brings together Democratic governors who control massive economic leverage. California alone accounts for 14.5 percent of national GDP. New York adds another 8 percent. Illinois, Massachusetts, Washington, and other Democratic trifecta states collectively represent over $7 trillion in economic output. Fifteen states remain under Democratic trifecta control. Twenty-two states plus Washington D.C. have Democratic attorneys general. These governors have conducted tabletop exercises for months, running scenarios on federal funding cuts and rights violations. They’ve developed legal frameworks for state resistance. They’re preparing for confrontation. Tax escrow is the confrontation that ends the current crisis.
The stakes aren’t ideological. They’re existential.
That means we have a duty to act decisively and proactively. Hitler wasn’t stopped through appeasement, autocrats truly never are. They will always take as much as they can and it will never be enough.
State legislatures can pass tax escrow legislation within 90 days. We know how to implement this. We know it works. The impacts would deal a devastating blow to a regime that currently has at least another full year to consolidate power further.
Tax escrow is one strategy. Public banking eliminates Wall Street control over state finances. Interstate compacts coordinate multi-state resistance. Criminal prosecutions hold federal officials accountable when Washington won’t. Revenue diversification reduces dependency. Federal oversight has collapsed. States either build independent systems or watch corruption operate with impunity using their money. Learn more in our new booklet “Intro to Soft Secession,” available now at TheExistentialistRepublic.com.
References
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Bureau of Justice Statistics. (2012). Federal law enforcement officers, 2008. U.S. Department of Justice, Office of Justice Programs. https://bjs.ojp.gov/library/publications/federal-law-enforcement-officers-2008
Bureau of Justice Statistics. (2022). Heroin, fentanyl, and other opioid offenses in federal courts, 2021. U.S. Department of Justice, Office of Justice Programs. https://bjs.ojp.gov/document/hfooofc21.pdf
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This is a fantastic strategy that's well past time to implement.
True Republicans should also love this strategy as the GOP advocates for limiting federal power and returning authority to local and state governments.... Right?!
WTF are we even talking about, when Trump has openly withheld FEMA, grants and other life sustaining funds based on political considerations alone? We have that on record, in a pleading, in federal court. So why the focus on legality when Trump has so clearly announced that laws no longer apply when it comes to the IRS?