New Jersey Governor‑elect Mikie Sherrill has publicly floated the idea of withholding federal tax payments in protest of the Trump administration, calling it a “fantastic idea” in an appearance on Jon Stewart’s podcast. She argued that if the federal government isn’t effectively running programs, why should the state continue funding them: “you’re paying us for a service … and they’re not delivering. So let’s stop paying for it.”
Similarly, California Governor Gavin Newsom previously raised the possibility of withholding federal taxes after reports that Trump planned to cut funding for state universities. However, legal and practical obstacles prevented the threat from materializing. Newsom acknowledged that most federal taxes are paid directly by individuals and businesses, making it difficult for a state to withhold them. Meanwhile, Treasury Secretary Scott Bessent warned that such action could amount to criminal tax evasion.
In a related development, U.S. District Judge Colleen Kollar‑Kotelly ruled that the IRS likely broke the law by sharing taxpayer address data with Immigration and Customs Enforcement (ICE). The judge called the IRS’s “Address‑Sharing Policy” arbitrary, noting it departed from its prior strict confidentiality without a reasoned explanation—violating both the Administrative Procedure Act and taxpayer–privacy protections in the tax code.
Court documents show ICE initially requested data on more than 7 million taxpayers, later narrowing that to 1.28 million “immigrant taxpayers.” The IRS ultimately provided ICE with around 47,000 addresses. Under the court’s preliminary injunction, the IRS is barred from sharing any more tax return information with ICE unless it involves a non-tax criminal investigation.
These intertwined developments reflect growing tensions over federal-state financial relations and immigrant privacy. While governors like Sherrill and Newsom use withholding talks as political pressure, the court’s decision underscores the legal limits of using tax data for immigration enforcement.
