Red States Accelerate Toward Zero Income Tax ‘Freedom Zone’ While Blue States Enact ‘Historic’ New Taxes

“We’re taking a historic step forward to balance an unfair system,” said Washington Gov. Bob Ferguson as he signed the “Millionaires’ Tax” into law on Monday.

The new law imposed a 9.9 percent tax on income over $1 million. The governor’s official press release stated, “The bill does not apply to income under $1 million.” However, Washington also included a “marriage penalty” in the legislation. According to the bill, “[I]n the case of spouses or state registered domestic partners, their combined standard deduction is $1,000,000, regardless of whether they file joint or separate returns.”  

While blue states expand income taxes, red states pursue the opposite approach. At a recent Daily Caller live forum, tax reform leaders Grover Norquist and Stephen Moore outlined a conservative strategy to shift red states from flat income taxes toward complete elimination of income tax, in order to form a southern “freedom zone.” (RELATED: Y’all Street Is Eating Wall Street’s Lunch)

Norquist, president of Americans for Tax Reform, pointed to a map of state tax systems to highlight the spread of flat-rate taxation. He explained, “There are now 16 flat-rate, single-rate states. There used to be eight. In the last five years, we’ve added eight.” He then highlighted five states on automatic paths to zero income tax. “That’s Oklahoma, Mississippi, South Carolina … Kentucky, [and] West Virginia,” he said. (RELATED: Go South, Young Man, Go South)

Norquist framed the red-state approach as effective and politically durable: “So the red states are moving to single-rate taxes, difficult to raise, easy to cut because everybody benefits at once, and on to zero.” He suggested sustained success could eventually support national policy reform once “half the senators will be from states that have a single-rate tax.”

Economist Stephen Moore took Norquist’s idea further. Noting that roughly 12 southern states already have low or no income taxes, he said, “What we need to do is create a freedom zone in America, which would be the South, where every southern state has no income tax.” He argued this zone should include universal school choice and right-to-work laws “so the dollars chase the kids, not those teacher unions.” 

The forum reflects growing momentum to cut income taxes in southern states. Mississippi enacted the “Build Up Mississippi Act” in March 2025, a law that reduces the state income tax rate to 3 percent by 2030 with the goal of gradually decreasing to zero percent. Meanwhile, South Carolina Gov. Henry McMaster signed a bill this week that established an automatic phased slowdown toward zero income tax.

As red states work to eliminate income tax, Stephen Moore warned that blue states “either have to change or die.”

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