Crypto execs warn California tax may drive capital out

Many crypto figures are concerned that a proposed 5% wealth tax would prompt wealthy individuals to relocate. Under the 2026 Billionaire Tax Act, California plans to tax fortunes exceeding $1 billion at a rate of 5%, with the proceeds intended for healthcare and social support, according to the SEIU United Healthcare Workers West union.

Moreover, billionaires facing a tax on unrealized gains may need to sell assets or parts of their companies to pay, with the option to pay upfront or spread the payment over five years, accruing interest.

Bitwise’s Horsley and Kraken’s Powell say investors will leave California 

While the proposal’s ballot fate is uncertain, some billionaires are unwilling to risk their fortunes. Bitwise CEO Hunter Horsley and Kraken co-founder Jesse Powell, among other crypto leaders, even argued that the tax would simply encourage the wealthy to leave.

Horsley shared on X, “Many who’ve made this state great are quietly discussing leaving or have decided to leave in the next 12 months.” 

Similar to that, Powell commented, “A 5% theft of unrealized gains and assets taxes were already paid on is about the most retarded thing I’ve ever heard. I promise you this will be the final straw. Billionaires will take with them all of their spending, hobbies, philanthropy, and jobs.”

Venture capitalist Chamath Palihapitiya also stated that tax risks are harming entrepreneurship by pressuring founders to pay levies on paper wealth — including those whose assets are illiquid. He discussed situations where founders could owe millions without the means to pay, which could chill early‑stage innovation in California.

Nevertheless, the SEIU UHW maintains that the funds could counter federal budget cuts, potentially raising $100 billion from around 200 billionaires. Suzanne Jimenez, the chief of staff at SEIU UHW, affirmed that the organization wants to fill a healthcare funding shortfall and described the state’s billionaires as its “most fortunate” residents.

Ro Khanna, a Democrat from California’s 17th District, is also a key supporter of the proposal. Through a series of X posts, he claimed the wealth tax will fund better education, housing, and childcare, ultimately benefiting US innovation.

Norway introduced a similar tax system, but it did not work as expected

Castle Island Ventures co-founder Nic Carter and ProCap BTC CIO Jeff Park also believe the tax could drive billionaires to relocate their capital out of California. Carter said that while he generally liked Ro and had positive experiences with his staff, he wondered whether they had analyzed how wealth taxes affect capital mobility.

He added that capital mobility has never been higher; thus, a one-off wealth tax sends a message to capital markets that more aggressive measures could come later.

Fredrik Haga, co-founder and CEO of on-chain analytics firm Dune, also explained that when Norway introduced a comparable tax, it triggered an exodus of wealthy individuals and failed to raise the expected funds. He maintained that Norway’s experience showed how aggressive socialist ideas can make society more equal but economically worse off.

Austin Campbell of NYU and Zero Knowledge Consulting, along with Bitwise founder Hunter Horsley, also cited a December audit by the California State Auditor that raised concerns over questionable use of taxpayer funds. Horsley stated that Ro was not prioritizing fixing the core issues, but was instead spending time pushing a policy he characterized as asset seizure to raise more money for the state, reflecting what he saw as a broader failure of public service.

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