California's Proposed 5% Wealth Tax on Billionaires Sparks Debate Among Crypto and Tech Leaders
California is considering a one-time 5% tax on net worth exceeding $1 billion, including unrealized gains on paper assets, as a way to fund healthcare and public services. This tax could require asset sales to cover tax liabilities even when capital gains have not been cashed out.
The proposal aims to address budget shortfalls and concerns that wealth growth outpaces wage increases. It is supported by groups like SEIU-United Healthcare Workers West and would need approximately 875,000 signatures to qualify for the November 2026 ballot.
However, the measure has drawn warnings from opponents who fear it may lead to capital flight, reduce California’s competitiveness, and ultimately decrease long-term tax revenues if high-net-worth residents and companies relocate. Prominent figures in the crypto and tech sectors have voiced similar concerns. Kraken co-founder Jesse Powell stated the tax could be "the final straw" causing the relocation of spending, jobs, and capital out of the state. Bitwise CEO Hunter Horsley noted that it could undermine private holdings and startup equity.
This proposal highlights an ongoing debate about taxing unrealized gains and wealth, balancing the goals of equity and adequate public funding against potential economic disruptions.
