California Governor Gavin Newsom threatens to withhold $80 billion in federal taxes after President Trump vowed to impose fines on the state for allowing biological males to compete in girls’ sports, prompting Treasury Secretary Scott Bessent to accuse him of encouraging “criminal tax evasion.”
Key Takeaways
- Treasury Secretary Scott Bessent warned that Governor Newsom’s threat to withhold $80 billion in federal taxes constitutes criminal tax evasion and could result in personal liability for state officials.
- President Trump threatened to levy substantial fines against California for allowing biological males to compete in girls’ sports, triggering Newsom’s retaliatory tax proposal.
- The Department of Justice has launched a federal investigation into potential Title IX violations by California related to transgender athletes in girls’ sports.
- California officials argue the state pays significantly more in federal taxes than it receives back in funding, with Assembly Speaker Robert Rivas calling potential federal funding cuts “unconstitutional and vindictive.”
- The escalating dispute highlights growing tensions between the Trump administration and California over transgender policies and states’ rights.
Treasury Secretary Condemns Newsom’s Tax Threat
Treasury Secretary Scott Bessent issued a stern warning to California Governor Gavin Newsom following his suggestion that California might withhold $80 billion in federal taxes. The dispute erupted after President Trump threatened to impose fines on California for allowing a biological male athlete to compete in girls’ sports. Bessent did not mince words in his assessment of Newsom’s proposal, characterizing it as a serious legal violation that could have significant repercussions for California residents and officials.
“Gavin Newsom is threatening to commit criminal tax evasion. His plan: defraud the American taxpayer and leave California residents on the hook for unpaid federal taxes,” said Scott Bessent.
Bessent further warned that state officials, including payroll managers, could face personal liability under federal law for attempting to evade or defeat tax obligations. Instead of pursuing this “dangerous path,” the Treasury Secretary suggested Newsom should focus on implementing tax cuts for Californians similar to those President Trump has enacted at the federal level. The administration has made it clear that any attempt to withhold federal taxes would be met with serious legal consequences.
Transgender Athlete Controversy Sparks Federal Investigation
At the heart of this escalating conflict is California’s policy allowing transgender athletes to compete in sports aligned with their gender identity rather than their biological sex. President Trump specifically criticized California after a biological male won state titles in girls’ sports, prompting him to warn of financial penalties. This controversy has now led the Department of Justice to launch a federal probe into potential Title IX violations by California, examining whether the state’s policies undermine protections designed to ensure gender equality in educational programs.
“A Biological Male competed in California Girls State Finals, WINNING BIG, despite the fact that they were warned by me not to do so, As Governor Gavin Newscum fully understands, large scale fines will be imposed!” said Donald Trump.
The California Interscholastic Federation (CIF) had previously amended its rules to accommodate transgender athletes, a decision that has become increasingly controversial as biological males have begun winning competitions in female categories. California gubernatorial candidate Steve Hilton has seized on this issue, promising to overturn laws protecting transgender competitors in sports if elected. The debate has polarized Californians, with supporters arguing for inclusivity and opponents raising concerns about competitive fairness.
California Claims Financial Imbalance With Federal Government
Newsom’s threat to withhold federal taxes stems from his assertion that California contributes significantly more to the federal government than it receives in return. As the nation’s most populous state and a major economic powerhouse, California remits approximately $80 billion more in federal taxes than it receives back in federal funding, according to the governor. This financial imbalance has become a rallying cry for California officials who view the Trump administration’s threats as disproportionately punitive.
“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,” said Gavin Newsom.
California State Assembly Speaker Robert Rivas echoed Newsom’s sentiments, describing potential federal funding cuts as “unconstitutional and vindictive.” Reports indicate that the Trump administration has considered canceling various federal grants to California, including funding for its state university systems, in response to the state’s stance on transgender athletes. A White House spokesperson acknowledged criticisms of California’s policies but stated that no final decisions on funding cuts had been made. The escalating rhetoric underscores the deepening divide between federal and state authorities.
Broader Implications of the Federal-State Standoff
This high-profile dispute represents just one facet of the ongoing tensions between the Trump administration and California. Other points of contention include immigration enforcement, National Guard deployment, and environmental regulations. The current standoff over transgender athlete policies and tax contributions has serious implications for federal-state relations and could potentially affect millions of Californians who rely on federal funding for various programs and services.
“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 @GavinNewsom is threatening,” said Scott Bessent.
Legal experts note that federal law considers willful tax evasion a felony, raising questions about the viability of Newsom’s proposal. Meanwhile, protests have erupted in Los Angeles related to immigration raids, further straining relations between federal, state, and local authorities. The governor’s office has not responded to requests for comment on Bessent’s warnings, leaving Californians uncertain about how this conflict might ultimately affect their state’s financial relationship with the federal government and the future of transgender athlete policies.
