Crypto Billionaires Consider Leaving California Over Proposed Wealth Tax
California faces a potential exodus of crypto billionaires and tech moguls after a prominent trade union proposed a new 5% assets tax targeting residents with net worth over $1 billion. The initiative, introduced by the Service Employees International Union-United Healthcare Workers West in November 2025, aims to generate an estimated $100 billion by taxing wealth rather than income, primarily targeting around 200 of the stateโs wealthiest residents.
The measure faces a significant hurdle, requiring 850,000 signatures to appear on the 2026 ballot. But the announcement has already stirred controversy, with some of Californiaโs most prominent billionaires threatening to leave the state amid fears of an economic backlash. Critics argue that such a move could ultimately deprive California of crucial tax revenues, which are vital for funding public services and infrastructure.
Industry Leaders and Political Figures Weigh In
Leading voices within the crypto and tech sectors have responded strongly. Jesse Powell, co-founder and chairman of cryptocurrency exchange Kraken, described the proposed tax as โtheftโ and warned it could be the โfinal straw,โ prompting billionaires to relocate their wealth, jobs, and philanthropic efforts outside California. Similarly, Hunter Horsley, CEO of Bitwise, noted that many high-net-worth individuals are quietly considering or even planning to leave California within the next year, following similar patterns in recent history.
Venture capitalist Chamath Palihapitiya echoed these concerns, stating that wealthy individuals with combined assets totaling $500 billion have already moved out. He argued that the tax legislation effectively discourages risk-taking and investment, further weakening Californiaโs economy. Horsley added that the departure of billionaires would inevitably reduce state revenue, forcing difficult choices like budget cuts or higher taxes on remaining residents.
Historical Context and the Reality of Wealth Migration
Research from the Tax Justice Network highlights that tax-driven migration among the wealthy is less common than critics suggest. A 2024 study observed that less than 0.01% of the highest earners have moved in response to wealth tax reforms in Scandinavian countries. While the UK experienced a temporary increase in millionaire departures, overall migration rates remain extremely low, suggesting that fears of a mass exodus are often exaggerated.
Analyses from organizations like Inequality.org reveal that the bulk of affluent individuals tend to remain connected to their local communities, citing family, social bonds, and business networks as key reasons for staying. Even amid recent tax hikes in states like Washington and Massachusetts, the number of high-net-worth residents continued to grow, and state revenues increased, challenging the narrative of imminent wealth flight.
However, critics like Powell argue that Californiaโs current fiscal issues are largely attributable to mismanagement and wasteful spending rather than the level of taxation. Notably, some industry leaders argue that revenue losses due to potential departures could be offset by reductions in government waste and fraud, which they claim drain public funds.
The California proposal remains under review and has yet to be put to a vote. While the possibility of losing crypto riches looms, skeptics believe that robust economic fundamentals and the ability for high-net-worth individuals to relocate effortlessly to other states or countries will mitigate the impact of new taxes.
