California’s Billionaire Tax Could Push Rich Residents Out, Crypto Leaders Warn

Highlights:

• California wants to tax billionaires 5% to fund healthcare and social programs.
  Crypto leaders warn the tax could make rich people leave the state.
  Experts say similar taxes in other countries failed and hurt the economy.

California’s proposed 2026 Billionaire Tax Act has increased debate about wealth and entrepreneurship. According to the SEIU United Healthcare Workers West union, the plan would tax fortunes above $1 billion at a 5% rate. The money is expected to fund healthcare and social programs. However, billionaires could face taxes on unrealized gains. This may force some to sell assets or company shares to pay the tax. The law would allow payments either upfront or over five years with interest. Critics also say these rules could disrupt financial planning and investment strategies.

Crypto Leaders Warn Billionaires Might Leave

Several crypto leaders have spoken about the possible consequences of the tax. Bitwise CEO Hunter Horsley and Kraken co-founder Jesse Powell have warned that taxing unrealized gains might push wealthy individuals to leave California. Horsley posted on X that many people who helped make the state successful are quietly discussing leaving or have already decided to leave within the next 12 months.

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 has also expressed strong opposition to the tax. He argued that a 5% levy on unrealized gains and previously taxed assets would be extremely harmful. He warned that it could be the final straw, causing billionaires to take their spending, hobbies, philanthropy, and jobs elsewhere. These remarks have highlighted concerns about potential capital flight.

Venture capitalist Chamath Palihapitiya has pointed out that such tax risks could hurt entrepreneurship. He explained that founders of early-stage companies might owe millions on paper wealth without having cash, which could slow innovation in the state. Analysts have noted that these concerns are shared across the tech and crypto sectors.

It’s not 1% a year for 5 years.

It’s a one time 5% tax on all assets and it will kill entrepreneurship in California.

Here is an example:

John Doe starts a company. He takes a nominal salary – say $150k for this example – and the rest in equity in the company. Let’s say he… https://t.co/zdq1bqovXX

— Chamath Palihapitiya (@chamath) December 28, 2025

Supporters Say California’s Billionaire Tax Could Fund Public Services

The SEIU United Healthcare Workers West has said the tax could raise about $100 billion from around 200 billionaires. Suzanne Jimenez, the union’s chief of staff, said the state’s billionaires are its “most fortunate” residents. She added that the money would help pay for healthcare programs.

Democratic Representative Ro Khanna of California’s 17th District supports the proposal. He said on X that the wealth tax could fund education, housing, and childcare. This could help US innovation. However, the ballot result is still uncertain. Some lawmakers still support it. Experts have warned that similar taxes abroad failed. Fredrik Haga, CEO of Dune, said Norway’s tax made rich people leave. It did not raise the expected money. He added it helped equality but hurt the economy. 

Nic Carter, co-founder of Castle Island Ventures, and Jeff Park, CIO at ProCap BTC, have also shared warnings. Carter said capital moves more easily than ever. He added that one wealth tax could signal tougher future taxes and may push billionaires to leave California. For the crypto sector, the debate is about more than money.

A foundational assumption behind the wealth tax is that while financial capital may be mobile, human capital historically has not been therefore the cost can be structurally bourne

I would start questioning that assumption heavily going forward with the rise of AI agents

— Jeff Park (@dgt10011) December 28, 2025