Could Trump’s Attack on Sanctuary Cities Trigger a Tax Revolt?
Analysis

Could Trump’s Attack on Sanctuary Cities Trigger a Tax Revolt?

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California is leading scores of cities and states fighting back against the Trump Administration’s executive order seeking to punish them financially for providing safe havens for illegal immigrants threatened with deportation.

Just yesterday, the city of San Francisco filed suit in U.S. District Court in Northern California challenging the legality of last week’s executive order.

Related: Trump Cracks Down on Sanctuary Cities – and It Could Cost Them Billions

Trump has directed the federal government to withhold federal grants and assistance to “sanctuary cities that refuse to cooperate with federal immigration enforcement agents in identifying and detaining illegal immigrants in their custody."

The lawsuit represents the first legal action brought against the Trump administration by a city being targeted for the potential loss of billions of dollars in federal assistance because of their benign, protective treatment of millions of illegal immigrants living throughout the country.

Cities, including New York, Chicago, Los Angeles and San Francisco that offer strong protection to illegal immigrants have the most at stake. San Francisco, for example, receives more than $1.2 billion annually in federal funding, most of which goes to health care, nutrition, and other safety net programs, according to USA Today.

“The president’s executive order is not only unconstitutional, it’s un-American,” San Francisco City Attorney Dennis Herrera said in a statement. “That is why we must stand up and oppose it. We are a nation of immigrants and a land of laws. We must be the ‘guardians of our democracy’ that President Obama urged us all to be in his farewell address.”

Related: Trump Era Begins with Moves Against Regulations, Obamacare

Trump is seeking to increase pressure on illegal immigrants and the cities and states protecting them as part of a larger strategy for tightening border security, building a 2,000-mile wall along the U.S.-Mexico border, and rounding up undocumented workers with criminal records for deportation.

“We’re going to strip federal grant money from the sanctuary states and cities that harbor illegal immigrants,” White House Press Secretary Sean Spicer told reporters last week. “The American people are no longer going to have to be forced to subsidize this disregard for our laws.”

But California, with roughly 2.5 million illegal immigrants out of a total population of 39 million, is fighting back to defend the immigration population and protect the estimated $40 billion to $50 billion it receives annually in federal grants and aid. While the administration hasn’t specified where the cuts will be made, community law enforcement, crime victims assistance and first-responder grants from the Justice Department and Department of Homeland Security are likely targets.

Democratic Gov. Jerry Brown and the state’s Democratic-controlled General Assembly are mounting a sophisticated legal battle aimed at tying up Trump’s Justice Department in a “myriad” of unending and draining court cases, according to the Los Angeles Times.

Related: Some Sanctuary City Officials Will Stonewall Trump Over Criminal Deportations

State officials believe they have legal precedent on their side. And the General Assembly recently retained Eric Holder, the former attorney general in the Obama administration to advise the state on legal tactics. Officials believe that Trump and his advisers would be on “shaky legal ground” attempting to cut off any federal funds allocated for anything other than law enforcement, and even then it would be politically risky to strip away funds from local police and crime victims, according to the newspaper.

Others who are up in arms over Trump’s assault on sanctuary cities are calling for retaliatory action against the new Republican administration that would hit the government in its pocketbook.

Take for example former state Assembly speaker Willie L. Brown Jr., who recently called for a tax rebellion of sorts against the federal government to protest Trump’s executive order.

KPIX 5 TV in San Francisco reported that officials are looking for funds that flow from California to Washington that could be used to effectively offset the potential loss of billions of dollars’ worth of federal funds.

“California could very well become an organized non-payer,” Brown said in an interview with the station aired last Sunday. “They could recommend non-compliance with the federal tax code.”

Related: Is this How Trump Will Get Mexico to ‘Pay’ for His Wall?

Brown didn’t provide specifics for what he has in mind, and state and federal tax experts say they are scratching their heads to figure out what that retaliatory action might entail.

About $205 billion flows annually from California to the federal government, but that represents individual and business federal taxes paid to the U.S. Treasury. And billions more go for federal excise and gasoline taxes, but those too aren’t under the control of the state government. So except for a few miscellaneous payments that may go from Sacramento to DC, the state has little leverage over the federal government, experts say.

“I don’t see much in the way of what the state government could stop in terms of going to Washington, D.C.,” Joe Henchman, vice president for state projects at the Tax Foundation,” said in an interview. “Certainly the biggest leverage California has is that they pay $205 billion a year in federal taxes. But the state government is not involved in that. That’s money paid directly by Californians to the federal government.”

Henchman and others see just one other alternative –- a popular uprising by California residents who stage a major protest by withholding their federal tax payments. It would be a sagebrush revolution of sorts, akin to previous tax protests over the years to object to excess government spending or U.S. warfare in Vietnam and the Middle East. But that would be a risky venture that would run afoul of the U.S. tax code and the Internal Revenue Service – and would almost certainly invite steep penalties and potential criminal action.

“I’m not sure citizens would risk jail sentences for that,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. “So you would be asking Elon Musk or Mark Zuckerberg not to pay their federal income taxes.”

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