California proposes a one-time 5% wealth tax on billionaires with net assets exceeding $1 billion, sparking strong opposition from the tech and cryptocurrency industries. Supporters hope to inject new momentum into public finances, while opponents warn that this move could accelerate capital and talent outflows, undermining California’s long-standing innovation economy.
(Background: Trump’s crypto tax crackdown? White House reviews “compliance with CARF crypto asset reporting framework” proposal, taxing overseas account holdings too)
(Additional context: Taxation eats up over half of profits? 3 legal profit strategies of crypto whales)

Table of Contents

• One-time wealth tax: proposal still awaiting referendum approval
• Supporters: can inject huge funds into the state treasury
• Tech and crypto industries push back

Recently, California has proposed a tax plan targeting ultra-high-net-worth individuals, drawing intense attention and strong backlash from the tech and cryptocurrency sectors. The proposal advocates a one-time 5% wealth tax on billionaires with net assets over $1 billion. Supporters believe it could generate significant revenue for the state government, while opponents warn it may accelerate capital and talent outflows, damaging California’s long-dependent innovation economy.

One-time wealth tax: proposal still awaiting referendum approval

This proposal, called the “2026 Billionaire Tax Act,” was initiated by the SEIU–United Healthcare Workers West, a California healthcare workers’ union. It is a ballot initiative scheduled for submission in November 2026. Currently, it is in the signature collection phase and has not yet qualified for the ballot.

According to the proposal, starting January 1, 2026, individuals residing in California with net assets exceeding $1 billion will be subject to a one-time 5% wealth tax. The tax applies not only to realized gains but also to unrealized capital gains on stocks, private company shares, real estate, art, luxury goods, and cryptocurrencies.

Taxpayers can choose to pay in full at once or over five years; if paid in installments, an additional 7.5% interest will be charged. The proposal also exempts certain assets such as primary residences, pensions, and retirement accounts.

Supporters: can inject huge funds into the state treasury

Supporters estimate that if the proposal passes, it could bring hundreds of billions or even over a trillion dollars in one-time revenue to the state government. They plan to allocate these funds to social programs such as healthcare, education, and housing to improve public welfare and services.

Tech and crypto industries push back

However, once the proposal was announced, it immediately triggered strong opposition within the tech and cryptocurrency communities. Industry leaders publicly stated that taxing unrealized assets would force the wealthy to sell highly illiquid assets to cover taxes, leading to capital flight, job losses, and weakened innovation.

Jesse Powell, co-founder of cryptocurrency exchange Kraken, directly called the measure “a 5% theft on unrealized gains,” predicting that after billionaires leave, consumer spending, charitable donations, and job opportunities will decline.

Hunter Horsley, CEO of Bitwise, said many long-term California contributors are already discussing or planning to leave the state within the next 12 months. Prominent venture capitalist Chamath Palihapitiya warned that since wealth is concentrated in illiquid equity, forced taxation could stifle early-stage innovation and entrepreneurship.

Nic Carter, partner at Castle Island Ventures, further questioned whether policymakers fully understand the reality of highly mobile capital; Fredrik Haga, CEO of Dune Analytics, cited Norway’s wealth tax experience, noting that wealthy individuals’ flight often results in lower-than-expected tax revenue.

Additionally, market rumors suggest that tech billionaires like Peter Thiel, Google co-founders Larry Page, and defense tech entrepreneur Palmer Luckey are considering reducing or severing ties with California to mitigate potential tax risks.