California Democrat 'deeply disappointed' after Newsom vetoes reparations tax break

"I am deeply disappointed that Governor Newsom vetoed AB 2186. Reparations are not a gift or a government handout," Assemblymember Tina McKinnor, D-Inglewood, told Fox News Digital in a statement. "Reparations are meant to repair harm, not be partially taken back through taxation."

Newsom vetoed the measure on Sept. 30 as he acted on a series of bills, including other reparations-related legislation.

In his official veto message, Newsom acknowledged the bill's intent but cited fiscal uncertainty.

"I thank the author for her continued work to redress the documented harms of slavery," Newsom wrote. "I was proud to sign into law last year legislation establishing the Bureau for Descendants of American Slavery, a first-in-the-nation law establishing a state agency that, among its key responsibilities, will advise on reparative justice programs for Black Americans. California's work on this important endeavor is just beginning."

Newsom also cited uncertainty about the potential cost of the exemption.

"Because the full scope of the proposed tax exclusion is unknown, fiscal caution is warranted," Newsom added. "The proposed exclusion for unspecified federal initiatives could be interpreted broadly, resulting in substantial fiscal uncertainty. Moreover, given the potentially significant General Fund implications, this measure should be considered as part of the annual budget process."

Assembly Bill 2599, authored by Assemblymember Isaac Bryan, D-Ladera Heights, applies to businesses with more than $100 million in annual worldwide gross receipts that existed-or have a predecessor entity that existed-on or before Dec. 31, 1964. Once funded by the Legislature, covered companies must submit sworn affidavits under penalty of perjury verifying searches for historical records involving the purchase or sale of enslaved people, their use as loan collateral, slave-related insurance policies, and other transactions. Covered companies will have until January 2029 to submit their first affidavits.

Under the text of AB 2186, gross income would not have included "any reparations benefit or payment received by a taxpayer during the taxable year" for taxable years beginning on or after Jan. 1, 2028, and before Jan. 1, 2033. The bill defined a "reparations benefit or payment" as any monetary payment, grant, trust distribution, debt forgiveness, or other financial compensation provided through a qualifying reparations program.

McKinnor emphasized that reparations payments are intended as compensation for generations of structural harm.

"Reparations payments are compensation for generations of injustice, discrimination, and economic harm," McKinnor said. "California cannot claim to support reparative justice while taxing the very compensation intended to repair that harm. I respect the Governor's concerns about fiscal responsibility, but justice must also be a priority."

"We cannot continue to study injustice, acknowledge the harm, and then hesitate when it is time to act," she added. "I remain committed to working with my colleagues and the new Governor to bring this legislation back in 2027. Justice delayed should not become justice denied."

California was the first state in the nation to establish a formal task force to study the legacy of slavery and recommend potential restitution measures. However, concrete direct-cash payout initiatives at the state level have stalled over budget concerns and legal vulnerabilities.

When reached for comment by Fox News Digital, Newsom's office said that "the veto message speaks for itself."