A recent tax proposal targeting extremely high-net-worth individuals in California has sparked significant attention and strong backlash from the technology and cryptocurrency industries. The proposal advocates for a one-time wealth tax on billionaires with a net worth exceeding $1 billion. Supporters argue it could generate substantial revenue for the state government, while opponents warn it could accelerate the outflow of capital and talent, severely damaging California's long-standing reliance on an innovation-driven economy.
A one-time wealth tax? The proposal still awaits a referendum.
The proposal, titled the "2026 Billionaire Tax Act," was initiated by the California healthcare workers' union SEIU – United Healthcare Workers West. It is a ballot initiative and is expected to be submitted to a statewide referendum in November 2026. Currently, it is still in the signature-collecting phase and has not yet officially qualified for inclusion on the ballot.
According to the proposal, starting January 1, 2026, any individual residing in California on that day with a net worth exceeding $1 billion will be subject to a one-time 5% wealth tax. The tax will not be limited to realized gains but will also cover unrealized capital gains on assets such as stocks, private company shares, real estate, art, luxury goods, and cryptocurrencies.
Taxpayers can choose to pay the full amount in one lump sum or in installments over five years; if they choose to pay in installments, an additional 7.5% interest will be charged. The proposal also stipulates that certain assets, such as primary residences, pension funds, and retirement accounts, may be exempted.
Supporters: This could inject huge sums of money into the state treasury.
Supporters of the proposal estimate that if passed, it could bring the state government tens or even hundreds of billions of dollars in tax revenue at once, and the funds are planned to be invested in social public projects such as healthcare, education, and housing to improve people’s livelihoods and public services at the grassroots level.
Technology and crypto industries rebound
However, the proposal immediately sparked strong opposition within the technology and cryptocurrency communities. Several industry leaders publicly pointed out that such taxation of unrealized assets would force wealthy individuals to sell highly illiquid assets to raise tax revenue, leading to capital outflows, job losses, and a weakening of innovation.
Jesse Powell, co-founder of cryptocurrency exchange Kraken, bluntly stated that this measure is tantamount to "theft of 5% of unrealized gains," and predicted that as billionaires leave, consumption, charitable donations, and job opportunities will also be lost.
Bitwise CEO Hunter Horsley stated that many people who have long been contributing to California's economy have begun discussing, and even planning, to relocate from California within the next 12 months. Renowned venture capitalist Chamath Palihapitiya also warned that entrepreneurs' wealth is largely concentrated in illiquid equity, and mandatory taxation could stifle early-stage innovation and entrepreneurial spirit.
Nic Carter, a partner at Castle Island Ventures, further questioned whether policymakers fully understood the reality of high capital mobility; Dune CEO Fredrik Haga cited the experience of Norway's wealth tax, pointing out that the outflow of wealthy individuals often resulted in lower-than-expected tax revenue.
In addition, there are widespread rumors that tech billionaires, including Peter Thiel, Google co-founder Larry Page, and defense technology company founder Palmer Luckey, are considering reducing or severing ties with California in response to potential tax risks.
