Gov. Gavin Newsom has signed off on a 100% state tax on cash any Californians obtain from Trump’s $1.8-billion “anti-weaponization” fund for his political allies.
Newsom unveiled his proposal in Might, after Trump’s Justice Division mentioned it might create a fund to compensate Trump’s allies who declare they’ve “suffered weaponization and lawfare” beneath Biden’s Justice Division.
The settlement fund was criticized by politicians on either side of the aisle, together with Sen. Mitch McConnell (R-Ky.), who described it as a “slush fund to pay individuals who assault cops.”
The fund stays in authorized limbo. Earlier this month, a federal choose in Virginia prolonged a court-ordered block on the plan, which critics warned might be used to pay pardoned Jan. 6 rioters.
Quick-tracked into legislation as a part of Senate Invoice 122, Newsom’s plan imposes “a tax on any settlement fund fee from the federal Anti-Weaponization Fund, or any subsequent fund, settlement, or settlement, as offered, at a charge of 100%,” in keeping with the invoice textual content. The tax applies to all tax years between 2026 and 2030.
Newsom signed the invoice Tuesday. In a press release, his workplace mentioned the tax is supposed to make sure that, ought to Trump’s fund proceed, California recipients received’t “obtain favorable state therapy on these funds.”
“We imagine democracy is price defending, the rule of legislation issues, and public {dollars} ought to help victims—not those that attacked the very establishments that shield our freedoms,” Newsom mentioned within the assertion.
College of Southern California legislation professor Ariel Jurow Kleiman, an professional on tax legislation and coverage, mentioned that whereas Newsom’s tax is a “novel authorized technique,” she believes there’s “no categorical authorized restriction” stopping California from implementing it.
States have a “vast diploma of discretion” to design their tax techniques — together with how they outline revenue — as long as they don’t violate their constitutions, Jurow Kleiman mentioned.
If a California resident wished to problem the tax in court docket, they would want to indicate they have been harmed by it to have standing to sue, in keeping with Jurow Kleiman. That will imply receiving a fee from Trump’s settlement fund after which paying the 100% California tax. Until the settlement fund is established and distributes funds, that state of affairs is unlikely.
Whereas there have been proposals to levy a 100% tax on revenue above sure thresholds — Sen. Bernie Sanders (I-Vt.) in 2023 mentioned he helps a 100% tax on revenue exceeding $1 billion — Jurow Kleiman mentioned she shouldn’t be conscious of any governments which have adopted such a coverage.
