Newsom is warned of ‘criminal tax evasion' if he withholds federal taxes

The Guardian

3 hours ago

The US treasury secretary, Scott Bessent, has warned California governor Gavin Newsom that he would be guilty of 'criminal tax evasion' if he withholds his state's tax payments to the federal government amid threats of a funding cut by Donald Trump.
Newsom had threatened to cut tax payments to the federal government two days ago after reports that Trump was preparing huge federal funding cuts targeting Democrat-dominated California, including its state university system.
'Gavin Newsom is threatening to commit criminal tax evasion,' Bessent said in a post on X. 'His plan: defraud the American taxpayer and leave California residents on the hook for unpaid federal taxes.'
Bessent continued: 'I am certain most California businesses know that failing to pay taxes owed to the Treasury constitutes tax evasion and have no intention of following the dangerous path Governor Gavin Newsom is threatening.'
He described Newsom's comments as 'extremely reckless' and advised the governor to come up with a tax-cutting plan for California that mirrored Trump's federal tax cutting plan, 'instead of committing criminal tax evasion'.
The treasury secretary's comments came after Newsom posted on Friday that 'Californians pay the bills for the federal government. We pay over $80 BILLION more in taxes than we get back. Maybe it's time to cut that off, Donald Trump.'
The California governor linked to a CNN report that the Trump administration is preparing to cancel some federal funding for California and federal agencies had been directed to identify grants that could be withheld, including the University of California and California state university systems.
In a statement on Friday, the White House spokesperson Kush Desai criticized California's energy, immigration and other positions as 'lunatic anti-energy, soft-on-crime, pro-child mutilation, and pro-sanctuary policies'.
'No taxpayer should be forced to fund the demise of our country,' Desai said, but he added that 'No final decisions, however, on any potential future action by the Administration have been made, and any discussion suggesting otherwise should be considered pure speculation.'
Newsom and Trump are accustomed to a war of words, including threats to withhold funding. The administration recently cut $126m in flood prevention funding projects, and Trump has threatened 'large-scale fines' on the state after transgender athlete AB Hernandez competed in the long jump, high jump and triple jump events at the California Interscholastic Federation track and field championships.
But the reported threat to cut off federal funding to California's university system appears to have pushed California officials into threats of retaliation. Soon before Newsom made his threat, California assembly speaker Robert Rivas described the rumored grant cancellations as 'unconstitutional and vindictive.'
'We're the nation's economic engine and the largest donor state, and deserve our fair share,' Rivas wrote. 'I'll use every legal and constitutional tool available to defend CA – we must look at every option, including withholding federal taxes.'