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

A proposed California ballot initiative, known as the **2026 Billionaire Tax Act**, would impose a one-time 5% tax on the net worth of individuals with over $1 billion in global assets, including unrealized gains on stocks, private equity, cryptocurrencies, and other holdings. The measure, if it qualifies for the November 2026 ballot and passes, targets wealth as of January 1, 2026, with payments potentially spread over five years.

Tech and crypto leaders have strongly criticized the proposal, warning it could accelerate an exodus of high-net-worth individuals to tax-friendly states like Texas or Florida. Figures such as Peter Thiel and Larry Page are reportedly considering reducing ties to California by year-end 2025 to avoid potential liability. Crypto executives, including Bitwise CEO Hunter Horsley and Kraken co-founder Jesse Powell, argue that taxing unrealized gains—especially in volatile markets like crypto—could force sales of assets to cover bills, stifling innovation and risking capital flight.

Startup founders highlight liquidity issues: many hold wealth in illiquid private company stock, potentially facing taxes on “paper gains” without cash to pay. Critics, including Y Combinator’s Garry Tan and investor Chamath Palihapitiya, say the tax threatens California’s role as a tech hub.

Proponents, backed by groups like SEIU United Healthcare Workers West, defend it as a modest levy to fund healthcare, education, and inequality reduction amid federal funding cuts. They note billionaires’ wealth has surged to over $2 trillion collectively, and the tax would generate limited revenue relative to their gains.

Governor Gavin Newsom has opposed the idea, and economists warn of administrative challenges, constitutional hurdles, and reduced state income tax revenue from departures. The initiative remains in the signature-gathering phase; its fate is uncertain.