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California’s proposed 5% tax on billionaire wealth has triggered sharp reactions from crypto executives, who warn it could drive capital and entrepreneurs out of the state before 2026. The ballot initiative, called the 2026 Billionaire Tax Act, seeks to tax net wealth above $1 billion to fund healthcare and state assistance programs. The SEIU United Healthcare Workers West union submitted the proposal for the November 2026 ballot.
If approved, the tax would apply retroactively to individuals who lived in California as of Jan. 1, 2026. It would include unrealized gains, which may force asset sales. At the same time, senior crypto figures argue the measure would reduce investment and employment. They say the tax would accelerate relocations already underway among wealthy founders.
The proposal would impose a 5% levy on net wealth above $1 billion. The SEIU United Healthcare Workers West union says the funds would support healthcare systems and social programs. Because the tax partly targets unrealized gains, affected individuals may need to sell shares or business stakes. The state would allow payment in a single installment or over 5 years, with interest.
Fox reported that a resident holding $20 billion in assets on Jan. 1, 2026, would owe a one-time tax of $1 billion. That amount could be spread across five years. The union filed paperwork to place the initiative on the November 2026 general election ballot. Voters would decide whether the measure becomes law.
Several crypto executives publicly criticized the proposal. Jesse Powell, co-founder of Kraken, said the tax would prompt billionaires to leave California with their businesses and philanthropy. Powell wrote on X that spending, jobs, and charitable activity would move elsewhere. He urged state leaders to address waste and fraud instead.
Hunter Horsley, CEO of Bitwise, echoed concerns. He pointed to a December audit by the California State Auditor that cited unaccounted-for or poorly justified expenditures. Meanwhile, Nic Carter questioned whether policymakers analyzed how easily capital can move. He compared one-time wealth taxes to warning signals for future fiscal demands.
Jeff Park also suggested that wealthy residents could shift assets out of California to avoid long-term exposure.
Supporters of the tax include Ro Khanna, a Democratic lawmaker from California’s 17th District. He argued on X that the tax could improve childcare, housing, and education, which could benefit innovation.
Still, opposition extends beyond crypto. Billionaire investor Bill Ackman warned that the state risks losing productive entrepreneurs and future tax revenue. Ackman wrote that Hollywood already faces decline and said further departures could weaken job creation. He linked the tax debate to broader concerns about California’s economic direction.
Reports from The New York Times also said billionaire tech investor Peter Thiel and Google co-founder Larry Page are weighing whether to cut ties with California over the proposal. As the debate continues, a central question remains: would the billionaire tax strengthen public services, or would it speed up the exit of wealth and innovation from California?
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California’s proposed 2026 Billionaire Tax Act seeks to impose a 5% levy on wealth above $1 billion to fund public programs. Crypto executives and investors warn it could trigger capital flight and relocations, while supporters argue it would strengthen healthcare and social services ahead of the 2026 vote.
