Governor Gavin Newsom approved a 100% state tax on the money any Californian receives from Trump's $1.8 billion “anti-armament” fund for his political allies.
Newsom unveiled his proposal in May, after Trump's Justice Department said it would create a fund to compensate Trump allies who claim to have “suffered from gunplay and legal warfare” under Biden's Justice Department.
The settlement fund was criticized by politicians of both parties, including Sen. Mitch McConnell (R-Ky.), who described it as a “slush fund to pay people who assault police officers.”
The fund remains in legal limbo. Earlier this month, a federal judge in Virginia extended a court-ordered block on the plan, which critics warned could be used to pay rioters pardoned on Jan. 6.
Newsom's plan, which was quickly signed into law as part of Senate Bill 122, imposes “a tax on any payment from the settlement fund of the Federal Anti-Gun Fund, or any subsequent fund, arrangement or agreement, as provided, at a rate of 100%,” according to the bill's text. The tax applies to all tax years between 2026 and 2030.
Newsom signed the bill on Tuesday. In a statement, his office said the tax is intended to ensure that if Trump's fund proceeds, California recipients will not “receive favorable state treatment on those payments.”
“We believe democracy is worth defending, the rule of law is important, and public dollars should support victims, not those who attacked the very institutions that protect our freedoms,” Newsom said in the statement.
University of Southern California law professor Ariel Jurow Kleiman, an expert in tax law and policy, said that while Newsom's tax is a “novel legal strategy,” she believes there is “no categorical legal restriction” that would prevent California from implementing it.
States have a “broad degree of discretion” to design their tax systems – including how they define income – as long as they do not violate their constitutions, Jurow Kleiman said.
If a California resident wanted to challenge the tax in court, they would have to prove they were harmed by it to have the right to sue, according to Jurow Kleiman. That would mean receiving a payment from Trump's settlement fund and then paying the 100% California tax. Unless a settlement fund is established and distributes payments, that scenario is unlikely.
While there have been proposals to impose a 100% tax on income above certain thresholds (Sen. Bernie Sanders (I-Vt.) in 2023 said he supports a 100% tax on income above $1 billion), Jurow Kleiman said he is not aware of any government that has adopted such a policy.
