Treasury Secretary Scott Bessent delivered a sharp warning to California Governor Gavin Newsom, saying the governor’s threat to withhold over $80 billion in federal tax payments amounts to “criminal tax evasion.” The rebuke comes amid rising tensions between the Trump administration and California leadership over sweeping federal funding cuts.
Newsom recently floated the idea of halting federal tax remittances in retaliation for cuts to university subsidies, infrastructure grants, and environmental funding. But Bessent made it clear: the move wouldn’t just be political—it could be criminal. “This isn’t a negotiation tactic,” Bessent said. “Withholding federal taxes is a federal crime, and anyone complicit in it, from payroll managers to state officials, could face prosecution.”
The warning marks a dramatic escalation in the standoff between Sacramento and Washington. It also signals the administration’s intent to hold state governments accountable if they attempt to undermine federal law for political leverage.
Rather than breaking the law, Bessent suggested that if Newsom wants to provide relief to Californians, he should pursue legal avenues—such as pushing for a state-level tax cut package that mirrors Trump’s federal tax reforms.
Newsom’s tax threat came in response to a string of recent moves by the Trump administration to rein in California’s defiance on issues like illegal immigration and federal enforcement cooperation. The state’s refusal to support ICE operations has already triggered the deployment of the National Guard to Los Angeles under federal authority.
Adding to the tension, Newsom recently lashed out at Defense Secretary Pete Hegseth, calling the administration’s handling of anti-ICE riots “deranged” and “dangerous.” But Bessent’s warning drew a clear line: political grandstanding doesn’t exempt anyone from the law.
As the showdown intensifies, the message from Washington is unambiguous—states cannot simply opt out of their federal responsibilities. And if Newsom follows through on his tax threat, he may be putting not just his political future, but the legal standing of his administration, at serious risk.