U.S. Treasury Secretary Scott Bessent has warned California Governor Gavin Newsom that he could face criminal charges if he carries out his threat to block the state’s tax payments to the federal government.
Newsom made the threat in response to President Trump’s warning that federal funds could be withheld from California due to the state’s continued defiance of federal policies and numerous legal challenges against the administration.
California is currently grappling with a significant budget deficit for the second consecutive year, and its Medicaid program has been forced to borrow funds to remain operational. Amid the fiscal crisis, Newsom has requested approximately $40 billion in federal assistance for wildfire recovery.
At the same time, his administration has launched multiple lawsuits targeting Trump administration policies, including those related to immigration enforcement and transgender issues. These lawsuits seek broad injunctions that would block the implementation of federal policies not only in California but across the country.
President Trump had previously threatened to cut federal sports funding after California refused to comply with a federal policy banning biological males from participating in girls’ sports. More recently, the U.S. Department of Transportation signaled it may seek to reclaim billions in federal funding spent on the state’s troubled high-speed rail project.
“Californians pay the bills for the federal government,” Newsom wrote in an X post Friday. “We pay over $80 BILLION more in taxes than we get back. Maybe it’s time to cut that off,” the governor continued before tagging President Trump in the post.
On Sunday, Treasury Secretary Scott Bessent took to X in order to warn Newsom that his threats are not feasible and could potentially result in criminal charges. “Governor [Gavin Newson] is threatening to commit criminal tax evasion,” Bessent posted. “His plan: defraud the American taxpayer and leave California residents on the hook for unpaid federal taxes.”
Bessent then addressed California businesses, stating that they are well aware that “failing to pay taxes owed to the Treasury constitutes tax evasion.” He went on to express confidence that they “have no intention of following the dangerous path Governor [Gavin Newsom” is threatening.”
“I would warn state officials, including payroll managers, that federal law attaches personal liability to an ‘attempt to evade or defeat tax,’” Bessent said, adding that the governor’s comments are “extremely reckless.”
“Instead of committing criminal tax evasion, Governor Newsom should consider a tax plan for California that follows the Trump Tax Cuts model and reduces the onerous state tax burden to allow families to keep more of their hard-earned money,” the treasury secretary concluded.
