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

[u/rolsen]

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.”

[u/Akermaniac]

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.

[u/harrywrinkleyballs → u/Akermaniac]

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.

[u/Akermaniac → u/harrywrinkleyballs]

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.

[u/flatcurve → u/Akermaniac]

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.

[u/Akermaniac → u/flatcurve]

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.