Crypto Billionaires Threaten to Leave California Over New Tax Proposal

California Billionaires Prepare to Exit Due to New Tax

Crypto billionaires are threatening to leave California after a prominent union proposed a 5% tax on assets for residents whose fortunes exceed one billion dollars. The International Union of Public Workers - Health Workers introduced this proposal in November 2025, estimating that the new tax could generate up to $100 billion from 200 residents, thereby offsetting federal funding cuts to California's health program.

To get the measure on the ballot for the November 2026 elections, 850,000 signatures will be required. Notable investors and billionaires, including PayPal co-founder Peter Thiel and Google co-founder Larry Page, have already threatened to exit the state, citing concerns that the departure of billionaires could significantly reduce California's tax revenues.

This threat is not new, and past experiences suggest that the departure of billionaires due to taxes might be more of a bluff. Jesse Powell, co-founder and president of the cryptocurrency exchange Kraken, referred to the proposal as "theft," stating that it would "be the last straw." Additionally, Bitwise CEO Hunter Horsley remarked that many who contributed to the development of the state are "quietly discussing" a potential departure within the next 12 months.

The union's proposal also includes a unique tax of $1 billion for residents with fortunes over $20 billion, imposing taxes on unrealized gains. While the tax revenues could provide short-term benefits, the primary criticism is that California's budget deficit could subsequently grow. Various analysts emphasize that the exodus of billionaires will negatively impact state revenues, leading to potential cuts in funding or tax increases for those who remain.

However, history suggests that only a small percentage of the wealthy choose to relocate following tax reforms. For example, a study by the UK-based Tax Justice Network found that after tax reforms in Norway, Sweden, and Denmark, fewer than 0.01% of the wealthiest households relocated to other countries.

As of now, the proposed tax in California has not made it to the ballot, and cryptocurrency billionaires may reassess their options before making a final decision.