Crypto Industry Pushes Back Against California 5% Wealth Tax Proposal

• A proposed Billionaire Tax Act in California has triggered strong opposition from the crypto industry.
• Some crypto key figures have warned that this could force billionaires to consider moving out of the state. 

Reports circulating in the mainstream media indicate that California has proposed a 5% tax on individuals with net wealth exceeding $1 billion through the 2026 Billionaire Tax Act.

According to reports, the revenue would be allocated to the healthcare systems and state assistance programs. As of the time of writing, the SEIU United Healthcare Workers West union has already submitted the paperwork to place this on the general election ballot in November 2026. Fascinatingly, this initiative has generated mixed reactions, with US Representative Ro Khanna defending the proposal.

According to the crypto-friendly Democrat, this tax would significantly fund better childcare, education, and housing. However, some key figures in the crypto community have strongly opposed this initiative. One of them is Kraken co-founder Jesse Powell, who has cautioned that the 2026 Billionaire Tax Act could drive billionaires out of the state.

Crypto and Tech Billionaires Consider Moving Out

Tech venture capitalist Peter Thiel, who has a home in the Hollywood Hills, is reported to be considering spending more time outside California and opening an office in another state. Castle Island Ventures founding partner Nic Carter also questioned whether an analysis of capital mobility was done in response to the taxes.

Joining the discussion was the co-founder and CEO of on-chain data platform Dune, Fredrik Haga. According to him, Norway attempted a similar initiative, which resulted in a mass exodus of the wealthy from the country.

A professor at New York University who is also the founder of Zero Knowledge Consulting, Austin Campbell, raised concerns about a December audit from the California State Auditor, which highlighted crucial issues, including unjustified expenditure. Similar sentiment was echoed by Bitwise founder Hunter Horsley, who claimed that politicians have long forgotten their roles as servants.

Regardless of these concerns, the proposal could reach the state ballot once it gathers enough signatures. When approved, it would apply to people who live in California as of January 1, 2026. According to the terms of the measure, those with $20 billion in assets would have five years to pay a one-time tax of $1 billion.

California has taken multiple crypto-related initiatives this year, including the Unclaimed Property Law, the Digital Assets bill, which added Bitcoin rights, and others. As detailed in our earlier discussion, California Governor Gavin Newsom has also announced the launch of “Trump Corruption Coin.”