California Governor Vetoes Bill Exempting Reparations Payments from Income Tax

<p>A California lawmaker expressed disappointment after Democratic Governor Gavin Newsom vetoed her bill that aimed to exempt future reparations payments from California's personal income tax. Assemblymember Tina McKinnor, D-Inglewood, stated, "I am deeply disappointed that Governor Newsom vetoed AB 2186. Reparations are not a gift or a government handout. Reparations are meant to repair harm, not be partially taken back through taxation." Newsom vetoed the measure on September 30 while addressing a series of bills, including other reparations-related legislation.</p><p>In his official veto message, Newsom acknowledged the bill's intent but cited fiscal uncertainty as a concern. He stated, "I thank the author for her continued work to redress the documented harms of slavery. 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." He also noted uncertainty regarding the potential cost of the exemption, saying, "Because the full scope of the proposed tax exclusion is unknown, fiscal caution is warranted."</p><p>Despite the veto of the tax exemption, Newsom signed another reparations-related measure into law, which requires large companies doing business in California to disclose slavery-era transactions. Assembly Bill 2599, authored by Assemblymember Isaac Bryan, D-Ladera Heights, applies to businesses with over $100 million in annual worldwide gross receipts that existed on or before December 31, 1964. Once funded by the Legislature, these companies must submit sworn affidavits verifying searches for historical records involving enslaved people and related transactions by January 2029.</p><p>McKinnor's measure, Assembly Bill 2186, was designed to exempt future reparations payments or benefits from California's personal income tax if qualifying state, local, or federal reparations programs were established. Under the bill, 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 January 1, 2028, and before January 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.</p><p>McKinnor emphasized that reparations payments are intended as compensation for generations of structural harm, stating, "Reparations payments are compensation for generations of injustice, discrimination, and economic harm. 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." She added, "We cannot continue to study injustice, acknowledge the harm, and then hesitate when it is time to act. 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."</p><p>California was the first state to establish a formal task force to study the legacy of slavery and recommend potential restitution measures. However, direct cash payout initiatives at the state level have faced challenges due to budget concerns and legal vulnerabilities. Localized reparations programs have seen mixed success across the country, such as Black residents in Evanston, Illinois, receiving $25,000 housing grants as part of a municipal program aimed at addressing historic housing discrimination. The future of state-funded reparations in California remains uncertain, especially with Newsom vetoing multiple proposals citing fiscal parameters and legal challenges, and the upcoming gubernatorial race featuring candidates hesitant to endorse broad direct cash handouts.</p><p>When reached for comment, Newsom's office stated that "the veto message speaks for itself."</p>