Florida drew a line in the sand against California's overreach.
Attorney General James Uthmeier isn't backing down from this fight.
And Florida just declared war on Gavin Newsom with one legal move that has California panicking.
California's tax trap punishes businesses that dare to leave
Florida Attorney General James Uthmeier filed a bombshell complaint with the U.S. Supreme Court this week accusing California of running an unconstitutional scheme to squeeze extra tax dollars out of companies that operate in multiple states.
The lawsuit alleges California's "special rule" for calculating corporate taxes violates the Commerce Clause, the Due Process Clause, and the Import-Export Clause of the Constitution by deliberately penalizing businesses that expand operations outside California's borders.¹
California uses what's called a "single sales factor" formula to calculate how much of a multi-state corporation's income can be taxed by the state.
Under normal circumstances, this formula would look only at where a company makes its sales.
But California created a "special rule" that lets the state exclude certain large transactions from the calculation — like property sales or major one-time deals.
Here's where it gets nasty.
By removing these big transactions from the formula, California artificially inflates the percentage of income it claims businesses owe in taxes.²
"California has created a tax system that punishes economic freedom," Uthmeier said in a statement after filing the complaint.²
"We will not tolerate California over-taxing revenue earned in Florida. The Newsom regime is obviously attempting to punish business owners who have fled California due to its disastrous policies."
https://twitter.com/AGJamesUthmeier/status/1983280143188508769
The scheme hits companies two ways at once.
First, it penalizes businesses that have already left California by taxing revenue those companies generate in states like Florida.
Second, it discourages companies still in California from expanding into other states because they'll face higher tax bills if they do.
The real target is businesses fleeing Newsom's disasters
Florida's complaint lays out exactly what California is trying to accomplish with this taxation policy.
"California's single-sales factor tariff, amplified by the Special Rule, deprives Florida of tax revenue by incentivizing corporations to move their payroll and property from Florida to California, or not to move their payroll and property from California to Florida," the filing states.³
California has hemorrhaged businesses and residents for years as Newsom's left-wing policies destroyed the state's quality of life.
High taxes, crushing regulations, rampant crime, and an anti-business climate drove companies to flee to states like Florida and Texas that actually want them to succeed.
The exodus got so bad that California desperately needed a way to recoup those lost tax dollars.
Enter the "special rule" — California's way of saying "you can leave, but we're taking your money with us."
The formula effectively functions as a punishment tax on interstate commerce.
If a company keeps all its operations in California, the special rule doesn't hurt them much.
But expand to Florida? Relocate headquarters to Texas? Watch your California tax bill skyrocket even on revenue earned entirely outside the state.
Uthmeier is asking the Supreme Court to declare California's rule unconstitutional and block its enforcement immediately.
The filing argues that California's policy represents an unlawful attempt to recoup economic losses as residents and businesses continue to leave for states with lower taxes and better business climates.
This fight exposes the real war between red and blue states
This isn't just about tax formulas and accounting rules.
Florida's Supreme Court filing exposes the fundamental conflict between two competing visions of America.
Blue states like California embraced every radical leftist policy imaginable — high taxes, crushing regulations, woke ideology, defunding police, soft-on-crime prosecutors, and government control over everything.
The result? Disaster.
Businesses fled. Crime exploded. The middle class got crushed. And productive citizens voted with their feet by moving to red states.
Rather than learn from their failures and change course, Democrats like Newsom doubled down.
They can't admit their policies destroyed what was once America's most prosperous state.
So instead, they rig the tax code to punish businesses for leaving and try to extract money from economic activity that happens entirely in other states.
Florida's lawsuit forces the Supreme Court to answer a critical question: Can California use its tax code as a weapon to punish interstate commerce and discourage businesses from operating in states that don't share California's radical agenda?
The Constitution is crystal clear that states cannot discriminate against interstate commerce or impose undue burdens on businesses that operate across state lines.
California's special rule does both.
It treats companies differently based on whether they expand outside California's borders.
And it effectively taxes economic activity that occurs entirely in other states.
The Supreme Court now must decide whether to hear this case and put an end to California's scheme.
If the Court allows California to get away with this, every high-tax blue state will adopt similar rules to trap businesses and punish them for seeking better opportunities in red states.
The stakes couldn't be higher for economic freedom and federalism.
¹ Anita Padilla, "Florida accuses California of unfairly taxing out-of-state business revenue, files complaint with SCOTUS," Florida's Voice, October 29, 2025.
² Ibid.
³ Ibid.
