Newsom Vetoes Reparations Tax Break, Drawing Disappointment from Lawmaker
California Governor cites fiscal concerns and uncertainty for blocking a bill that would have exempted reparations payments from state income tax.
California Assemblymember Tina McKinnor, D-Inglewood, expressed deep disappointment after Gov. Gavin Newsom vetoed her bill that aimed to exempt future reparations payments from the state's personal income tax. The veto, issued on September 30, came as Newsom acted on numerous bills.
"Reparations are not a gift or a government handout," McKinnor stated. "Reparations are meant to repair harm, not be partially taken back through taxation." She added that California cannot claim to support reparative justice while taxing the compensation intended to address that harm.
In his veto message, Newsom acknowledged the bill's intent and his support for reparations initiatives, referencing his signing of legislation last year to establish the Bureau for Descendants of American Slavery. However, he cited fiscal caution as the reason for the veto. "Because the full scope of the proposed tax exclusion is unknown, fiscal caution is warranted," Newsom wrote. "The proposed exclusion for unspecified federal initiatives could be interpreted broadly, resulting in substantial fiscal uncertainty." He also suggested that measures with significant General Fund implications should be considered within the annual budget process.
McKinnor's bill, AB 2186, was designed to exclude reparations benefits or payments from gross income for taxable years beginning between January 1, 2028, and January 1, 2033. The bill defined such benefits as monetary payments, grants, trust distributions, debt forgiveness, or other financial compensation provided through a qualifying reparations program.
Despite vetoing McKinnor's bill, Newsom signed another reparations-related measure, Assembly Bill 2599, authored by Assemblymember Isaac Bryan, D-Ladera Heights. This new law requires large companies doing business in California to research and publicly disclose any slavery-era transactions. The law applies to companies with over $100 million in annual worldwide gross receipts that existed, or had a predecessor entity, before December 31, 1964. These companies will need to submit sworn affidavits verifying searches for records related to the purchase or sale of enslaved people, their use as collateral, and other slave-related transactions by January 2029.
California has been at the forefront of reparations discussions, being the first state to establish a task force to study the legacy of slavery and recommend restitution. However, state-level direct-cash initiatives have faced challenges due to budget concerns and legal considerations. McKinnor remains committed to reintroducing the legislation, stating, "Justice delayed should not become justice denied."
Similar localized reparations programs have seen varied progress across the country. Evanston, Illinois, for instance, has provided $25,000 housing grants to Black residents as part of a municipal program addressing historic housing discrimination. Nationwide, local and municipal efforts to provide direct compensation or economic aid are under consideration.