Red States Cut Taxes While Blue States Reach Deeper Into Your Wallet

Trump's economic team is pushing a growth-first tax vision while blue states hunt for bigger bites of your paycheck.

Mar 23, 2026

President Trump's economic team is floating a big idea: let states ditch income taxes and raise the money through broader sales taxes instead. In other words, stop punishing work and investment. Tax consumption instead. Imagine that.

That idea is landing in a country where red states are already moving in that direction. According to The Center Square, 23 states have cut their top marginal income tax rates since 2021. Georgia lawmakers are now pushing bills that would phase out the state income tax over six years. Meanwhile, Washington state, which long bragged that it had no income tax, is moving toward a new tax on high earners.

You do not need a Ph.D. in economics to see the split here. One side wants to compete for families, jobs, and investment. The other side wants to squeeze the productive class a little harder and call it compassion.

The Red-State Playbook Is Getting Simpler

The basic argument from tax-cutting states is straightforward. If you tax income less, you leave more room for businesses to invest, for workers to keep what they earn, and for families to make decisions without the state taking first bite.

The Center Square reported that Trump's Council of Economic Advisers proposed replacing state income taxes with a broader sales tax on goods and services, while exempting groceries, housing, and products already hit with excise taxes like gasoline, alcohol, and tobacco. The report's claim is the sort of thing that gets attention fast: most states could replace personal income taxes, corporate income taxes, and existing general sales taxes with a new broad sales tax below 10 percent and still replace the revenue.

That is not small change. That is a direct challenge to the political class that treats income tax withholding like oxygen.

Georgia Is Trying to Make the Shift Real

Georgia is not just talking about lower rates. Lawmakers have introduced legislation to phase out the state income tax over a six-year period. The details will matter, obviously. They always do. But the direction matters too.

And the direction is clear.

A state that already has strong population growth and a competitive business climate is looking at whether it can go further. That is how conservative governance is supposed to work. You do not wait for Washington to fix your economy. You move first.

According to the Georgia General Assembly's legislation portal, lawmakers have filed legislation on the issue this session. The site itself is a clunky mess, because of course it is, but the legislative effort is real and lines up with the broader push reported by The Center Square.

Blue States Keep Learning the Wrong Lesson

While red states are working to lower the tax burden, blue states are heading the other direction.

Washington state is a good example. The Center Square reported that Gov. Bob Ferguson plans to sign legislation imposing a 9.9 percent tax on income above $1 million. That is a remarkable turn for a state whose constitution has long been understood as a barrier to an income tax.

The sales pitch, as always, is that it is only for the rich. You have heard that one before. New taxes always start as a narrow moral crusade. Then they become permanent. Then they spread. Then the middle class discovers the definition of rich is suspiciously flexible.

This is the part the left never wants to admit: high earners are mobile. Businesses are mobile. Capital is mobile. If your state treats success like a piñata, eventually the candy leaves the party.

The Two Competing Visions

Here is what the fight really comes down to:

Red states are betting that growth comes from rewarding work, investment, and production.
Blue states are betting that government can tax more without driving away the people who pay the bills.
Trump's economic advisers are giving red states a framework to go even further.
Voters will eventually decide which model they want to live under.

That last point matters. This is not some abstract think-tank food fight. It affects where families move, where jobs are created, and how much of your paycheck you actually get to keep.

What Trump's Team Is Really Saying

The Council of Economic Advisers proposal is bigger than one tax tweak. It is a philosophical argument.

Taxing income means the government skims off the top when you work, save, invest, or build. Taxing consumption says the state should take less from production and more from spending. Conservatives have argued for versions of this for years because it aligns better with growth and personal responsibility.

The CEA estimate, as cited by The Center Square, is that eliminating income taxes could raise state economic growth by 1 percent to 1.6 percent and increase average wages by about $4,000. If those numbers are even close, that is not just a tax discussion. That is a competitiveness discussion.

Reasonable people can debate the mechanics. They should. What they should not do is pretend the current system is some sacred cow. It is not. It is a policy choice. And some states are choosing better.

Why This Matters to You

If you live in a red state, your lawmakers now have a stronger argument for moving faster. If you live in a blue state, this story is your warning label.

The country is separating into two economic models right in front of you. One model says government should take less and trust people more. The other says government should take more and promise to spend it wisely this time. Sure.

The states that win this fight will not be the ones with the cleverest press releases. They will be the ones where families can afford to stay, businesses can afford to grow, and workers can keep more of what they earn.

That is the real test. Not rhetoric. Results.

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