Crypto Leaders Oppose California 5% Wealth Tax on Billionaires

Key Highlights

California’s proposed 5% billionaire wealth tax aims to fund healthcare, education, and food assistance programs.
Crypto and business leaders warn the tax could trigger capital flight and force billionaires to sell assets.
Critics cite Norway’s experience and state audit concerns, questioning the tax’s effectiveness.

A proposed 5% wealth tax on California’s billionaires is drawing sharp criticism from crypto executives and investors, who warn it could trigger capital flight and drive entrepreneurs out of the state. The proposal, known as the 2026 California Billionaire Tax Act, is expected to appear on the statewide ballot and has already sparked a wider debate about wealth taxes, innovation, and fiscal accountability.

The initiative seeks to impose a one-time 5% tax on net wealth above $1 billion, affecting roughly 200 Californians who collectively hold an estimated $2 trillion in assets.

According to the SEIU United Healthcare Workers West union, the tax aims to address looming funding gaps in California’s healthcare system while also supporting public K-14 education and state food assistance programs.

Supporters argue that steep federal healthcare funding cuts, estimated at nearly $100 billion over the next five years, have pushed California toward a healthcare crisis. The union says these cuts could lead to job losses, higher insurance premiums, reduced coverage, and hospital closures if alternative funding sources are not found.

Billionaires seriously consider leaving California

According to a report by the New York Times, many billionaires including Peter Thiel and Larry Page are exploring ways to reduce or cut ties to California due to the proposed measures. Thiel, who also backs the digital asset exchange Bullish, is considering relocating and investing in other states.

Page, Google’s Co-Founder and a longtime Palo Alto resident, has filed documents to incorporate three limited liability companies in Florida and is reportedly contemplating leaving California by the end of the year.

The potential tax would retroactively apply to anyone residing in California as of January 1, 2026. Billionaires with $20 billion in assets could face a one-time $1 billion tax, payable over five years.

For Page, with an estimated net worth of $258 billion, the tax could exceed $12 billion, for Thiel, with $27.5 billion, the bill could be more than 1.2 billion.

Crypto executives warn of capital flight

Senior figures in the crypto industry have also strongly opposed the measure. Crypto exchange Kraken’s Co-Founder Jesse Powell and Bitwise’s CEO Hunter Horsley argue that taxing unrealized gains would force billionaires to sell assets or equity in their businesses, potentially disrupting companies and accelerating relocation out of California.

I say this with no joy as a California resident:
Many who’ve made this state great are quietly discussing leaving or have decided to leave in the next 12 months.
More generally, one of the fascinating developments of this decade is people voting their views not with the… https://t.co/bTlBnsYdnY
— Hunter Horsley (@HHorsley) December 27, 2025

Powell warned on X that the proposal could be “the final straw,” saying billionaires would take jobs, philanthropy, and investment with them.

Castle Island Ventures partner Nic Carter echoed similar concerns, questioning whether policymakers had fully analyzed capital mobility in an era when wealth can move across borders quickly.

Critics compare the proposal to wealth tax experiments in Europe. Dune CEO Fredrik Haga pointed to Norway’s experience, where a similar tax reportedly led many wealthy individuals to move abroad, generating less revenue than expected.

Defenders say investment in services fuels innovation

The proposal has been publicly defended by California Democrat Representative Ro Khanna, a Democrat with a crypto-friendly policy.

My district is $18 trillion, nearly 1/3 of US stock market in a 50 mile radius. We have 5 companies with a market cap over a trillion dollar companies. If I can stand up for a billionaire tax, this is not a hard position for 434 other members or 100 Senators.
Those saying that… https://t.co/k7j4TvJARK
— Ro Khanna (@RoKhanna) December 27, 2025

He asserts that investment in childcare, housing, healthcare, and education eventually enhances innovation through maintaining a stable workforce and decreasing inequality over time.

Yet skepticism remains over whether new tax revenue would be effectively used. Horsley and NYU Professor Austin Campbell cited a December audit by the California State Auditor that flagged issues with how taxpayer funds were managed, including untracked or weakly justified spending.

Broader U.S. debate on crypto and taxes

The California proposal is a contrast to the recent developments in other states. Arizona has proposed pro-blockchain bills that would exempt digital assets in the state of Arizona and safeguard blockchain node operators.

The lawmakers of Ohio and Wyoming have also introduced exemptions of small crypto transactions as an incentive to adopt and innovate.

With states adopting various approaches, the billionaire tax in California brings to the fore an increasing conflict between investment in the services of the state and business-friendly environment.

As the voters are likely to resolve the question in 2026, the discussion will influence more extensive debates about wealth, taxation, and the future of innovation in the U.S.