Federal law currently requires (nearly) every individual to file a tax return with the IRS, and it requires every business to withhold money from payroll and remit to IRS with appropriate bookkeeping.

Even if California decreed all of that money should be paid to its new agency instead of to the feds, anyone doing so would be individually breaking federal law, and the gestapo would be sent after them. It’s a nice idea but I don’t see how it could work, short of secession (which has its own problems).