A proposed 5% wealth tax on billionaires in California is drawing sharp criticism from prominent figures in the cryptocurrency industry, who warn the measure could trigger an exodus of entrepreneurs, capital flight, and broader economic harm.
Known as the 2026 California Billionaire Tax Act, the initiative would impose a one-time 5% levy on net wealth exceeding $1 billion, potentially affecting around 200 ultra-wealthy residents whose combined assets are estimated at roughly $2 trillion.
Backers, led by the SEIU United Healthcare Workers West union, say the tax is intended to generate revenue for critical public services, including healthcare, education, and food assistance programs.
Supporters argue that steep funding shortfalls, particularly in the state’s healthcare system, necessitate bold solutions.
According to the union, anticipated federal healthcare funding cuts of nearly $100 billion over the next five years could result in job losses, higher insurance premiums, reduced coverage, and even hospital closures if new revenue streams are not identified.
However, the proposal’s opponents, including major crypto industry executives, contend that taxing unrealized gains, a key element of the tax, could force wealthy individuals to sell stock or parts of their companies simply to meet payment obligations. Critics argue this could disincentivize investment and innovation in California’s technology and finance sectors.
Among the dissenting voices is Jesse Powell, co-founder of crypto exchange Kraken, who took to the social media platform X to condemn the plan. “I promise you this will be the final straw,” Powell wrote, warning that billionaires would take their spending, philanthropy, and job creation with them if the tax passes.
Industry veteran and Bitwise CEO Hunter Horsley has also voiced strong opposition, echoing concerns about potential capital flight and negative economic consequences.
Critics further argue that much of the revenue raised could be diverted to bureaucratic waste rather than addressing the state’s core challenges. They emphasize that taxing unrealized gains, assessed when wealth, not income, increases, is untested territory that could create uncertainty for business owners and investors.
As California voters prepare for the 2026 ballot, the debate over the billionaire wealth tax is likely to intensify, highlighting broader national tensions over inequality, taxation, and economic growth. Lawmakers, taxpayers, and business leaders will watch closely as the initiative progresses toward public vote.