U.S. Treasury Secretary Scott Bessent cautioned California Governor Gavin Newsom that he may face criminal charges if he proceeds with his threats to obstruct California tax payments to the federal government.
Newsom’s threats were a reaction to President Trump’s indication that federal funds could be withheld from California due to the state government’s numerous challenges to, and defiance of, federal policy.
The Golden State is currently grappling with a significant budget deficit for the second consecutive year, with the state’s Medicaid program borrowing funds to remain operational. In this context, Newsom has requested approximately $40 billion from the federal government for fire relief.
Simultaneously, Newsom’s administration has initiated several lawsuits against the Trump Administration concerning various policies, including immigration enforcement and issues related to transgender rights, among others. The state is pursuing broad injunctions aimed at blocking several Trump Administration policies not only in California but across the nation.
Trump had previously threatened to withhold federal sports funding after the state defied a federal transgender policy that prohibits biological males from participating in girls’ sports. More recently, the Transportation Department indicated it might reclaim billions of dollars in federal funding that was misallocated to the state’s problematic high-speed rail project.
“Californians pay the bills for the federal government,” Newsom stated in a post on X on Friday. “We contribute over $80 BILLION more in taxes than we receive back. Perhaps it is time to terminate that,” the governor added, tagging President Trump in the post.
The constitutional grounds for Newsom’s decision to withhold funds from the federal government remain ambiguous, if they exist at all. Conversely, the federal government’s authority to withhold funding from states is significantly more clearly articulated.
On Sunday, Treasury Secretary Scott Bessent utilized X to caution Newsom that his threats are impractical and could lead to potential criminal charges.
“Governor [Gavin Newsom] is threatening to engage in criminal tax evasion,” Bessent stated. “His strategy: to defraud the American taxpayer and leave California residents responsible for unpaid federal taxes.”
Bessent subsequently addressed California businesses, indicating that they are fully aware that “failing to pay taxes owed to the Treasury amounts to tax evasion.” He expressed confidence that they “have no intention of pursuing the perilous course that Governor [Gavin Newsom] is threatening.”
“I would caution state officials, including payroll managers, that federal law imposes personal liability for an ‘attempt to evade or defeat tax,’” Bessent remarked, emphasizing that the governor’s statements are “incredibly reckless.”
“Rather than engaging in criminal tax evasion, Governor Newsom ought to contemplate a tax strategy for California that aligns with the Trump Tax Cuts model and alleviates the burdensome state tax load, enabling families to retain more of their hard-earned income,” the treasury secretary concluded.
Bessent’s remarks followed shortly after White House border czar Tom Homan warned that Newsom and Los Angeles Mayor Karen Bass could face criminal investigations if they actively obstruct federal immigration operations in California.
“If he genuinely cared about public safety in California, he would not maintain a sanctuary for criminals, where offenders are released onto the streets in this state daily due to his policies,” Homan commented regarding Newsom.
