Crypto and Tech Billionaires Warn of California Exodus Over Proposed 5% ‘Unrealized Gains’ Wealth Tax

High profile names across the crypto and tech sector are sounding alarms over California’s proposed 2026 Billionaire Tax Act, a ballot initiative that would impose a one-time 5 percent tax on net wealth above $1 billion, including unrealized gains on paper assets, to help fund state services. Opponents argue the measure could trigger an exodus of high-net-worth residents, disrupt local investment and innovation, and force equity sales to cover tax liabilities.

Industry Backlash Builds: Capital Mobility and Exodus Risks

The ballot measure, backed by Service Employees International Union-United Healthcare Workers West, seeks to levy a one-time 5 percent tax on the net worth of Californians with assets exceeding $1 billion, with proceeds directed primarily toward healthcare and public services. Because the tax would apply in part to unrealized gains, increases in asset value that have not been sold, critics contend it could compel wealthy individuals to sell stock or portions of their businesses merely to cover the tax bill, even when no cash has been realized.

Prominent crypto and tech leaders have reacted strongly. Kraken co-founder Jesse Powell posted on X that the tax could be “the final straw,” suggesting billionaires could relocate their spending, philanthropy, jobs, and capital out of California if the measure proceeds. Bitwise CEO Hunter Horsley echoed concerns that taxing unrealized gains would undermine the financial structure of private holdings and startup equity.

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. Solve the waste/fraud issue. https://t.co/DKcNWni2kB

— Jesse Powell (@jespow) December 28, 2025

Broader Political and Economic Debate

The initiative must gather nearly 875,000 signatures to qualify for the November 2026 ballot. Proponents argue it offers a mechanism to address growing state budget shortfalls, particularly in healthcare, by tapping wealth that currently escapes taxation because most billionaires do not realize gains through sales of their assets. Supporters contend that annual wealth growth has far outpaced wage growth and that taxing accumulated wealth is a matter of equity.

Opposition is not limited to the private sector. Some commentators warn that the proposed tax could diminish California’s competitiveness, accelerate capital flight to more tax-friendly jurisdictions, and ultimately reduce long-term tax receipts as wealthy residents and companies relocate.