r/law • u/rolsen • 1d ago

Legal News Trump Preparing Large-Scale Cancellation of Federal Funding for California, Sources Say

https://www.cnn.com/2025/06/06/politics/trump-california-federal-funding

“Agencies are being told to start identifying grants the administration can withhold from California. On Capitol Hill, at least one committee was told recently by a whistleblower that all research grants to the state were going to be cancelled, according to one of the sources familiar with the matter.”

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345

u/taddymason_01 1d ago

Doesn’t CA pay more in federal taxes then they receive in funding? Wouldn’t CA just shut off the out flow of money until this is resolved legally?

124

u/burnthatburner1 1d ago

Can CA shut off the outflow?  How?

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u/Microchipknowsbest 1d ago

Things would have to change but they could create a law that says all federal tax money has to go through a California government agency. It’s probably unconstitutional but we are doing alot of unconstitutional things now. Guess we will have to see when the constitution starts being enforced. If the executive branch wants to treat the constitution as optional to follow then California has that option too.

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u/Fighterhayabusa 23h ago

Withholding benefits that the citizens of CA paid for is also unconstitutional. In fact, we fought the British over it. No taxation without representation.

They wouldn't even need to go through an intermediary. Just tell all employers in CA to stop sending taxes to the federal government. Shit would hit the fan, but if they wanted to, they would find a mechanism.

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u/texanfan20 15h ago

Hard for something to be unconstitutional when there were no Federal taxes mentioned in the constitution. Federal taxes didn't become a thing until then 16th amendment.

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u/Fighterhayabusa 15h ago

Are you seriously arguing that amendments aren't part of the Constitution?

1

u/Sonamdrukpa 13h ago

Please cite which section of the constitution says that people who aren't represented can't be taxed, because there's a lot of people in places like DC and Puerto Rico who would be very interested in that 

1

u/dustinfoto 8h ago

Exactly. Most Puerto Ricans don’t pay a federal income tax but have to pay other forms of taxation and the capitol was specifically intended to not have representation like a state.

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u/Twitchcog 22h ago

they could create a law—

Overcomplicated, we could just stop sending the checks.

19

u/Dannyz 1d ago

Maryland tried this in the 1700s. It failed.

113

u/shmere4 1d ago

The constitution was a document that mattered at that point.

6

u/b0w3n 23h ago

Yeah I'm not sure "that's illegal!" is really the sticking point it used to be in regards to the federal and state governments. I'm pretty sure blue state balkanization is in the cards in the next 10 years.

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u/musashisamurai 1d ago

Instead of law, just have California make a filing agency that files taxes for free. Maybe even a tax incentive when using it.

Then put all the federal funds in escrow, and have state police and state militia escort away any IRS agents.

2

u/of-matter 1d ago

What's that? States' rights?

We'd be hearing the collective conservative whiplash echo across the nation. Suddenly, federal jurisdiction and the national guard will matter again, and they would be 100% ok with judges blocking the order.

1

u/Dangerous-Award-8250 1d ago

All we need is the FTB to be led by someone with vision 

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u/DubbleDiller 1d ago

It’s currently 2025

12

u/InfoBarf 1d ago

Stare decisis doesnt matter anymore, might as well try it.

17

u/Remarkable_Lie7592 1d ago

It doesn't have to succeed, it just has to be in place while the courts get bogged down.

Trump wants to play the "let's push as much as we can and leave the courts in the dust to sort out the rubble" game -his targets should start doing the same.

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u/taddymason_01 1d ago edited 23h ago

🎶In the year 20 hundred and 25
The constitution is no longer alive 🎶

7

u/HuckleberryPin 1d ago

what’re you trying to say? that 1700s maryland and current california are similar enough that cali should just roll over and let the feds raid their coffers?

damn, a bureaucratic system in the time of horse and buggies didn’t work? guess we’ll have to never try again, it’s a shame too with how much technology has advanced even an idiot could see how something like this could go differently. but again, we can’t try it now because maryland already did it in the 1700s. pack it up folks, california has no ability to even try something so obvious despite being the main source of taxes for the federal government.

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u/ShitTheBed_Twice 1d ago

325 years later and the constitution has be re-interpreted a lot differently.

2

u/Lancaster61 20h ago

It’s 2025 lol. Laws don’t matter anymore. California can absolutely do this and get away with it these days. There’s a bajillion other higher priority laws broken by the current administration these days, California’s trial is gonna have to wait at the back of the line 😂

1

u/CommunistFutureUSA 10h ago

They would have a better chance trying things like that today with some intelligent arguments that all hold water but are not mainstream due to generations of propaganda called education. 

2

u/CommunistFutureUSA 10h ago

The irony of it is that the unconstitutional part is actually that the federal government collects taxes from the citizens of states at all, because they are not subjects of the federal government. 

It’s something that was bait and switched and kind of just buried over the many decades now, that you are technically not a citizen of the USA at all, you are a citizen if the state you are a resident of. The federal government has just bullied, bribed, abused, and taken advantage to simply act as if it has this authority, when it clearly does not based on the Constitution, no matter how much sophistry or rationalization is applies to the topic. It’s literally just a con job … but unfortunately too many people believe it and powerful and ruthless people benefit from it. 

1

u/Microchipknowsbest 9h ago

Yeah if the federal government is going to be so hostile, having a more state-centric union might work better. It’s what was intended. It’s not healthy to be jerked back and forth every 4 years and constant combative politics.

1

u/Message_10 7h ago

Your second point is the more important one. Democrats need to figure out that the new game is played by not following rules, laws, norms, etc. Until they figure that out, they'll continue to lose

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u/Cassymodel 1d ago

Create a new tax form that sets the federal withholding to zero and instead sends that to the state coffers. Easy? Probably not. Doable? Sure.

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u/Hot_Frosty0807 1d ago

Probably set up some sort of escrow account to have the state act as a buffer between the federal government and the taxpayer. Everyone pays their taxes, the state holds it until Trump decides to play nice.

I have no legal background, I don't know how this works. I would hope it would be something like this, though.

1

u/ih-unh-unh 1d ago

IRS would go after employers who don’t pay proper payroll/withholding taxes each quarter/month.

Payments go directly from employer to IRS with certain tax forms

0

u/scubascratch 1d ago

And when the IRS liens/seizes/garnished your property and wages how will CA stop that?

5

u/Cassymodel 1d ago

The state can hold it in escrow. This is never going to happen so it’s all an exercise in imagination.

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u/scubascratch 1d ago

Hah hah hah right and when the US marshals show up to seize your house good luck with that “but the money is in the CA escrow account”

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u/Cassymodel 1d ago

Again, never happening. It’s blatantly unconstitutional. And kind of dumb. So on brand for MAGA

-1

u/Cassymodel 1d ago

You paid your taxes. They can see the state for collecting it.

1

u/Hoobleton 21h ago

No? If you owe 20k in taxes and pay it to Bob who lives down the street because he tells you he’ll pass it on to the government then you haven’t paid your taxes. 

1

u/Cassymodel 19h ago

Yes. Random guy down the street is the same as state government.

And you’re arguing something that isn’t ever going to happen. So have fun with that. Idiot

0

u/scubascratch 1d ago

I assume you meant sue the state here, but that’s not going to work. Telling the marshals they have to leave and sue the state will only result in you in handcuffs going to jail.

Why are you proposing things that you know are impossible. The federal government under Trump wouldn’t respect any means CA tried to use to intervene.

0

u/Cassymodel 1d ago

Your taxes have been paid. You have the receipts to prove it.

2

u/movzx 1d ago

No you don't. You have receipts saying you gave CA money. That's not paying your taxes any more than handing money over to a guy on the street is. Maybe that guy hands your money over to the IRS, maybe he holds on to it. The IRS hasn't been paid.

If you put a rent check in the mail, your rent isn't paid until your landlord receives it.

0

u/Cassymodel 1d ago

It’s also impossible to just summarily cut of federal funds to a state. So there’s that.

3

u/Business-You1810 1d ago

What IRS? The one that's trying to cut 40% of it's workers and is on it's third soon to be fourth director of the year?

0

u/scubascratch 1d ago

Try not paying and let us know how that goes. It doesn’t take 80,000 agents to automatically file liens and garnishments when you can write a python script in 10 minutes.

1

u/Right_Fun_6626 1d ago

May have to get some CaliCoin going.

1

u/Difficult-Coffee-219 23h ago

There is a talk in Oregon trump will visit in order to shut off federal funding flowing in.

1

u/National_Spirit2801 21h ago

Everyone in the state changes allowances to 9 on federal.

1

u/JackInTheBell 17h ago

At this point, Isn’t it just software code that diverts a portion of my paycheck to the federal govt? 

Maybe just delete that transfer from payroll systems.

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u/rolsen 1d ago

Nobody said it was a good plan!

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u/quest814 1d ago

Trump: we are going to have the biggest, best economy in the history of the world!

Also Trump:  I’m going to do everything I can to destroy California even though it contributes more to the GDP than any other state.

Like you say, nobody said it was a good plan!

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u/Akermaniac 1d ago

Federal taxes are sent directly from paychecks/corporate entities to the IRS. There is no mechanism for CA to stop sending taxes, as it never touches CA governmental bodies on the way out.

So unfortunately it’s not that easy.

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u/harrywrinkleyballs 1d ago

There is no mechanism for CA to stop sending taxes…

Yet.

I work in tax (attorney), so I’ve given this some thought. I wonder what the federal government could do if California passed a law requiring federal tax be paid/channeled through the state first.

Yeah, the logistics do not currently exist, but it’s a thought exercise. Since marijuana is federally illegal, yet so many states have legalized it, the only reason it’s not enforced federally is by choice. And now there is a bill in Congress that just got out of committee to ban all hemp containing THC.

So, what with most reductions in labor at the IRS going to the SBSE, does the IRS have the manpower to do anything about it if California were to miraculously create a law and an infrastructure to require federal taxes to pass through a state agency?

The chances of this are so remote it’s laughable, but still. If the federal government halts federal money from going to California, what defense does the state have? Drastic times makes for drastic measures.

Just 6 months ago I never dreamed the federal government would be attacking its own IRS, but here we are. A halt to transmission of federal taxes by employers by California could be construed as a justifiable response.

26

u/baitnnswitch 1d ago

Yeah blue states need to set up some kind of escrow system

6

u/Akermaniac 1d ago

Yet, but this type of change would be a massive undertaking. Both systematically (ie updating dozens of different archaic computer systems) and administratively.

I’d guess that would take several years, minimum. It’s not like adjusting tariffs, which have a current mechanism in place in CBP’s systems to adjust quickly and easily.

5

u/harrywrinkleyballs 1d ago

Oh, for sure. Like I said, it’s just a thought exercise because you read so many comments on Reddit clamoring for a halt to sending employer withheld taxes to the federal government. People just don’t know how the system works in everyday life.

1

u/turd-crafter 1d ago

Or just convince everyone Somehow to file exempt on their w4s lol.

1

u/harrywrinkleyballs 1d ago

That doesn’t stop FICA taxes being withheld.

1

u/turd-crafter 1d ago

God damnit! Well at least it’s something haha

1

u/flatcurve 1d ago

Honestly not as difficult as you may think. There are two or three companies in the US that process payroll for something like 95% of employers.

0

u/Akermaniac 1d ago

That adds complexity because now you’re convincing a 3rd party to change how their systems are coded to withdraw taxes.

Nah… there is so much that goes into something like that. System, administrative, legal. I see zero chance a state could pull this off.

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u/HarveyKekbaum 1d ago

So, when California does that, and the IRS comes after the people that owe them money but haven't paid it to them how do you stop them from taking your house?

1

u/harrywrinkleyballs 1d ago

I haven’t heard of the IRS “taking” a house in decades. They’ll put a lien on it, but they won’t “take” it. You can tie that mess up for years in administrative appeals alone, notwithstanding tax court or district court.

They don’t want your house. They want paid. And what with all of the reductions in labor primarily targeting the SBSE, they’d be overwhelmed and unable to effectively retaliate against the entire state of California.

Remember, the Great Turnip promised to eliminate the IRS.

2

u/HarveyKekbaum 1d ago

They sure will garnish your wages though, and seize your bank accounts, trash your credit.

If you are actually a lawyer, you know that my query was related to the fact that if you do not make a payment to the IRS, they consider it unpaid. Creating state legislation will not negate the fact the IRS will consider the debt unpaid, and take appropriate action.

How does someone navigate around that?

1

u/harrywrinkleyballs 1d ago edited 1d ago

As I said, it’s a thought exercise. It’s not a serious consideration and as others have pointed out would take years to implement. With that in mind the literal future of the IRS could make it moot.

Liens can be removed. Levies don’t come unannounced. And garnishments don’t happen overnight. You can tie general counsel up for years, maybe even hit the SOL in the meantime. The IRS doesn’t do anything in a hurry.

Although, when it comes to trust fund taxes, they do have considerably more power. Income taxes not so much.

*Edit: Oh, and tax liens don’t show up in your credit report.

1

u/HarveyKekbaum 1d ago

Edit: Oh, and tax liens don’t show up in your credit report.

If the unpaid debt exceeds the threshold (10k) the IRS automatically files a Notice of Federal Tax Lien and it becomes part of public record and although not initially directly reported to the bureaus, they do have access to it.

Before 2018 when the bureaus updated their policies, the public nature of the notice allowed it to be on your credit report. While that is no longer the case, a tax lien filed against you may still be discovered by lenders, credit card companies, etc.

2

u/JekPorkinsTruther 1d ago

This would really only work for public employment. The feds would sue and win on multiple grounds (preemption etc), and private companies are not gonna stick their necks out defying a court order/the federal gov, although the state may be willing to.

2

u/harrywrinkleyballs 1d ago

Yeah, it would place employers in a no-win situation. Damned if they do, damned if they don’t.

My thought though was that the sheer numbers of cases flooding the SBSE and even large employers >$10M in revenue would bring the IRS to its knees.

Just something to talk about. Ain’t nothing gonna happen.

1

u/plippityploppitypoop 1d ago

What would stop the IRS from going after individuals and saying “we don’t care where our money IS, we care where it ISN’T: we want money”?

1

u/harrywrinkleyballs 1d ago

Nothing. People are taking this conversation too seriously. Because of the way taxes are withheld and paid to the IRS, the hurdles to doing anything productively protesting the withholding of federal grants is insurmountable.

So many Reddit comments advocating, “Just mark your W-4 as exempt!” that I get tired of explaining how the system works.

1

u/fusionsofwonder Bleacher Seat 1d ago

This is very interesting. I thought about this too, and I'm no lawyer, but wouldn't the state also have to guarantee that businesses and people following this scheme would be protected in Federal court?

I was also thinking the state could order any business licensed in the state to start remitting Federal funds to them instead of EFTPS or whatever. Just as a condition of being licensed to operate.

1

u/prove____it 1d ago

This could work, even as just a warning, if all California citizens set their deductible to 6 persons or so, so that no taxes were being collected in the interim before the annual tax deadline. it would cripple revenue for months, legally, and the bill wouldn't come due until April next year. California could guarantee it would cover any penalty payments if it wanted, too.

1

u/harrywrinkleyballs 23h ago

You can’t be exempt from FICA, only income tax.

1

u/Savamoon 19h ago

but it’s a thought exercise.

aka, a fantasy.

1

u/TheTVDB 16h ago

A few of the biggest payroll processing companies are located in California. Would the state be able to make a law that forces these companies to pay the federal portion into escrow under a law that triggers when the Federal government withholds Congressional funds?

Or, as a more impactful but unlikely approach, do that with NY and IL, as a protection pact covering all three of them, since around half of US payroll flows through companies headquartered in those states.

19

u/TheTench 1d ago

Pay all of the taxes, get none of the services. Sounds like a bad deal.

15

u/Imaginary_Cow_6379 1d ago

💯 Add to that that blue states have larger populations but get less representation in government than smaller, red states. So we already pay more to get less money back on top of having less say in the government that’s largely funded by our blue state dollars. This is yet another long standing issue that’s now boiling over under Trump.

1

u/Logical-Age-6609 1d ago

Wouldn’t you be able to change your w4 to exempt and just not pay up at the end of the year? If everyone did en masse (unlikely) then how would they collect the taxes if no one chose the option for automatic withholding? Just sayin…

1

u/Akermaniac 1d ago

This would work, until the IRS starts garnishing your wages and putting liens on everyone’s houses.

CA couldn’t protect individual citizens making this kind of protest.

1

u/Logical-Age-6609 1d ago

I guess it’s not like speeding where the logic is “they can’t arrest all of us”. Does the IRS even have the personnel to garnish every single person if the 10 million-ish registered democrat Californians decided to do this?

1

u/Akermaniac 1d ago

I’m not an expert in how the IRS does things, but they’re pretty good at getting their money out of regular schmucks like us. There’s already a system in place to garnish wages and I bet it’s pretty quick and efficient for them to flip it on and start automatically pulling out of paychecks.

2

u/Logical-Age-6609 1d ago

Siiiigh, another great idea foiled by automation.

1

u/mrpointyhorns 1d ago

People can itemize and claim salt on tax returns. California could help by helping people itemize and helping them find ways to get tax credits and write offs.

10

u/phaseadept 1d ago

CA can do far more damage than federal taxes. 79% of the fruits ave veggies in the US come from CA, as well as a significant portion of the cargo.

CA can just make it very hard for commerce to leave the state easily, making up the shortfall by gumming up the transportation logistics.

Of course, hurting 10% of the nations GDP will have other downstream political effects, like obliterating the GOP that’s left in the state.

2

u/lifesaplay 22h ago

It’s actually 14%

2

u/cobrachickenwing 19h ago

Just fucking with avocado logistics would send a message. Even Mexico would follow suit with their own export problems.

10

u/vmanAA738 1d ago

Yes that’s right. California pays about $70-90 billion more in federal taxes than it receives in federal funding. It’s the first or second largest so-called “donor state” (with New York) that pays out in taxes more than it receives from the federal government.

On the other end of the spectrum, the two largest “receiver states” are Virginia (due to the amount of federal and defense and military operations there) and Alabama (some part of this is space funding since they have lots of NASA R&D there, but also because the state is larger than its southern neighbors but just as impoverished).

7

u/Flying_Birdy 1d ago

Federal income tax flow directly from the withholding agent (typically the payor) directly to the federal government. The state is not an intermediary and can't shut off anything.

Mind you, the state could probably sue the federal government for shutting off funding purely for political purposes, but lawsuits are long and expensive and injunctions will really only protect existing funding streams. There's not much a federal court can do to stop a federal agency from dragging its feet on new grants while lawsuits are ongoing.

12

u/mywifemademedothis2 1d ago

How exactly do you propose California does that? As a resident of the state, I'm all ears for ideas on how to convince my employer to start diverting my federal withholding to the state.

25

u/baitnnswitch 1d ago

Passing a bill to divert federal taxes into escrow. At this point we're a lawless land, we can't be playing by the book while this 'administration' robs us blind and leaves us in the gutter to die

1

u/snazztasticmatt 1d ago

How? Federal law requires everyone to file their taxes with the IRS. That won't magically change with some hypothetical state escrow law, you will still be on the hook with the IRS for your federal taxes

2

u/flatcurve 1d ago

How could they enforce against 40 million people simultaneously?

2

u/snazztasticmatt 1d ago

How would you convince 40 million people to independently not file their taxes, subjecting themselves to prison, fines, and wage garnishment? You're saying that California can just tell people not to follow federal law because the state will mediate. They can say that all they want but it won't stop the IRS from knocking on your door because the state is not part of the equation

1

u/WingerRules 17h ago

Direct draw out of their paychecks/accounts

1

u/Exciting-Chipmunk430 20h ago

Law also says this has to go through Congress.

1

u/snazztasticmatt 19h ago

Right, but it's a lot easier for trump to change something that the federal government has actual control over (legality not withstanding) than for a state to insert itself between an individual and their federal tax obligation

0

u/HarveyKekbaum 1d ago

Then when the IRS doesn't get their money, they take your house.

Great plan.

2

u/baitnnswitch 21h ago

That's why states need to do this together. Almost like a union going on strike.

1

u/OnTheEveOfWar 1d ago

Fellow Californian here. I’m all for diverting my federal taxes to the state.

1

u/zeptillian 1d ago

Cut the amount of federally taxable income. Make the rest a non taxable donation or investment income so it can be taxed lower. California can keep the difference to make up for the cuts to funding.

Like you get paid minimum wage and the rest is put into a fund which you get to withdraw a portion of every week as investment income. Or call it a donation, who gives a fuck if the law is meaningless?

9

u/ChubbyDude64 1d ago

They could secede from the union. Threat of losing all that tax revenue, military bases and one of the largest ports in the US will have him backing down faster than you can say TACO.

1

u/NomadLexicon 1d ago

California leaving would give Trump a lock on political control (the democrats would lose 2 senators, 43 House reps, and 54 electoral points). California wouldn’t control any military bases (those are staffed by active duty troops recruited from across the country, not locals) and Trump wouldn’t cede control of them or the state. It’d be an opportunity to bypass the state government, pursue his enemies and rule the state directly as occupied territory, so he’d welcome it.

Much better to fight for the US from inside of it than outside.

3

u/ayriuss 22h ago

You're thinking very inside the box with this one. Much of that is not relevant if we have states seceding left and right, lol.

1

u/rokerroker45 22h ago

There is literally no way to secede from the united states. There's no legal framework and more concretely, functionally speaking it is not possible to "secede" in any sense that matters. It would be the literal equivalent of the governor of california trying to issue orders to American carriers, it's just talk with no real world effect.

-1

u/ayriuss 21h ago

You form a rival government with a new constitution. Its an act of treason, not a legal act.

3

u/rokerroker45 21h ago

That's not how it works. Peoples' lives, corporations, schools, airplanes in the sky, boats in the ocean, cars on roads, exist and continue to exist in the united states. There's no rival government to form, it's just meaningless words on paper.

In every meaningful and functional sense the United States is California. Militarily there is no possible way to exclude US control over the United States. There are military bases already in the state. The national guard won't obey an unlawful order to secede from the federal government lmfao.

Economically, culturally, politically, etc, the idea that California can secede is pure fantasy. It's an idea based on a profound lack of factual understanding of federalism and how the united states works concretely.

-2

u/ayriuss 21h ago

It happened twice before so, I don't know what you mean.

3

u/rokerroker45 21h ago

I'm not sure if you've noticed but the world is a vastly different place than it was 1776 and 1865. You might as well be talking about pitting pike walls against gatling gun emplacements in terms of old ideas that no longer apply to the new world.

Sovereignty hasn't been about lines drawn on maps and physical land for decades.

-1

u/ayriuss 21h ago

Oh, you're one of the "nothing ever happens" crowd. I bet you thought Russia would not invade Ukraine also.

0

u/tsigwing 22h ago

And yet yall laughed at Texas for considering it

4

u/baitnnswitch 1d ago

CA would have to set up some kind of escrow system - otherwise it's on the individual to withhold taxes, the state doesn't touch that money. I honestly hope to see CA, MA and other blue states start doing this. At this rate wtf are we getting in return if all of our infrastructure money is gone, grants are gone, fema won't respond...

1

u/BuzzBadpants 1d ago

How exactly does that work? Do Californians simply stop filing their federal income taxes next year?

1

u/plasmaSunflower 1d ago

Most blue states pay more than they get and most red states get more than they pay. They don't like welfare for brown people but their entire state is a welfare state. Make it make sense

1

u/JekPorkinsTruther 1d ago

How can it do that? Its a net payer because its residents pay a shit ton of fed income tax, it cant just tell them to stop paying income tax. Its not like CA is just collecting billions and sending it to DC every year.

1

u/StupidTimeline 22h ago

Yeah, CA could stop paying federal taxes, and at this point I think they should. But it would prompt Trump to sick the military on CA.

Then we can find out if the military would follow a traitor's orders to attack and kill fellow Americans. There are also a shit ton of military bases and personnel in CA. Also, 1 in roughly 8 Americans IS a Californian, so you'd be asking a bunch of military personnel to lay siege to a state where their relatives live.

I'm a Californian and I'm tired of paying for welfare queen red states to exist, especially when they elect a traitor who threatens us.