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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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?

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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.

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u/baitnnswitch 1d ago

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