Crypto billionaires are threatening to depart the state of California after a outstanding commerce union proposed a 5% property tax on residents price greater than $1 billion.
The Service Workers Worldwide Union-United Healthcare Staff West proposed the brand new tax again in November 2025. The commerce union advised that the brand new tax would usher in as much as $100 billion from 200 state residents, greater than making up for federal funding cuts to California’s state healthcare program. The measure would require 850,000 signatures earlier than it may be placed on the poll for a preferred vote within the 2026 elections in November.
Outstanding buyers and billionaires primarily based in California, akin to PayPal co-founder Peter Thiel and Google co-founder Larry Web page, have already threatened to depart. Others have argued {that a} billionaire exit may take away essential sources of tax income for the state.
Nonetheless, the uber-rich threatening to depart resulting from taxes will not be a brand new phenomenon, and previous expertise means that the threats of exodus from crypto riches could also be a bluff.
Crypto billionaires “quietly discussing” whether or not to depart
The union filed its proposal on Nov. 26. Along with the 5% tax, it could additionally impose a one-time tax of $1 billion on state residents price over $20 billion. The levy on wealth, moderately than earnings, would represent a tax on unrealized positive factors.
Outstanding members of the crypto business, in addition to the tech and enterprise capital sectors current in California, at the moment are up in arms.
Jesse Powell, co-founder and chairman of cryptocurrency change Kraken, referred to as the measure a “theft,” stating that the tax “would be the remaining straw. Billionaires will take with all of them of their spending, hobbies, philanthropy and jobs.”
Bitwise CEO Hunter Horsley mentioned, “Many who’ve made this state nice are quietly discussing leaving or have determined to depart within the subsequent 12 months.” He mentioned that billionaires will probably comply with a supposedly rising development of “folks voting their views not with the poll field” and relocate to different jurisdictions.
Chamath Palihapitiya, a former Fb govt and outstanding enterprise capital investor, claimed that individuals with a collective internet price of $500 billion had already fled the state. “They took no threat due to the proposed asset seizure tax – launched as a ‘Billionaire Tax.’”
He famous a standard argument amongst detractors of the tax, particularly that, whereas the tax could also be a boon for state coffers within the quick run, “the California price range deficit will solely get greater.”
Horsley mentioned, “When billionaires depart, so does income. If income goes down, the state might want to both: (A) cut back their spending / applications / advantages (B) improve taxes on those that keep, with no improve in advantages.”
Conservative suppose tanks just like the Cato Institute have argued previously that the highest earners pay a disproportionate share of earnings tax.
The crypto business might discover it particularly straightforward to relocate within the headwinds of latest taxes, in response to Fortress Island Ventures companion Nic Carter. He mentioned that capital is now “extra cell than ever” and that “distributed or globalized startups are utterly unusual now, even at scale.”
What do the wealthy really do after a brand new tax?
In 2024, the Tax Justice Community, a British advocacy group, revealed a working paper on the subject. It discovered that after wealth tax reforms have been launched in Norway, Sweden and Denmark, lower than 0.01% of the richest households relocated.
The UK noticed the second-highest internet outflow of millionaires in 2024, with over 9,000 leaving the nation. However the Tax Justice Community’s communications head, Mark Bou Mansour, famous that this was lower than 1% of the some 3 million millionaires supposedly residing within the nation on the time.
“There isn’t any millionaire exodus. In the event you have a look at their revealed migration numbers going again to 2013, millionaire migration charges have constantly stood at lower than 1% yearly since then, each globally and nationally. So, what their knowledge really exhibits, taken at face worth, is that millionaires are extremely motionless,” he mentioned.
One other 2024 paper from the London Faculty of Economics discovered that the ultra-wealthy have been pretty connected to put and couldn’t discover respondents within the 1% tax bracket who would depart the UK.
Such examples presume that the rich have been shifting to a different nation, however even within the case of California, the place the crypto-rich would threat solely shifting to a different state, the information nonetheless doesn’t assist the danger of a wealth exodus.
Inequality.org, an advocacy group involved with wealth distribution within the US, mentioned that “whereas some tax migration is inevitable, the rich that transfer to keep away from taxes characterize a tiny proportion of their very own social class.”
Citing knowledge from the Institute for Coverage Research and the State Income Alliance, Inequality.org said that high earners have a tendency to not transfer due to household, social networks and native enterprise information.
Regardless of tax hikes in Washington state and Massachusetts, the variety of people with a internet price of a minimum of seven figures continued to develop. Moreover, every state was in a position to increase appreciable income to fund state applications.
Funding state applications appears to be the least of a number of the California ultra-wealthy’s issues. Powell mentioned that present taxes have been being thrown away over wasteful spending and fraud.
David Sacks, the White Home’s crypto and AI czar and a crypto billionaire in his personal proper, weighed in, stating, “Why does California want a wealth tax? To fund the large fraud. Pink states like Texas and Florida don’t even have earnings taxes. Democrats steal every part, then blame job creators for his or her ‘greed.’”
Allegations of fraud in states with Democratic governors, like California and Minnesota, have currently preceded the Trump administration sending in federal policing businesses just like the Federal Bureau of Investigation and Immigration and Customs Enforcement. Within the case of Minnesota, native authorities have denied the unverified allegations.
The California tax proposal nonetheless hasn’t made it onto the poll, not to mention handed a vote and approval by the governor. California might lose a few of its crypto-rich, however the advantages in income could also be price it.
Journal: How crypto legal guidelines modified in 2025 — and the way they’ll change in 2026