California’s proposed 2026 Billionaire Tax Act is drawing mounting criticism from prominent figures across the crypto and technology sectors, who warn that the measure could drive capital and entrepreneurs out of the state while failing to deliver its intended benefits.
Supporters of the proposal argue it would provide much-needed funding for public services, setting the stage for a heated debate ahead of a potential ballot vote.
What the 2026 Billionaire Tax Act proposes
The ballot initiative proposes a one-time 5% tax on net wealth above $1 billion, including unrealized gains, with proceeds earmarked for healthcare and state assistance programs.
Backed by the Service Employees International Union–United Healthcare Workers West, the measure would require affected billionaires to pay the tax either in a single installment or over five years with interest.
Critics argue that taxing unrealized gains could force individuals to sell shares or parts of their businesses to raise cash, even if those assets have not been liquidated.
Opponents say this could disrupt company ownership structures and discourage long-term investment, particularly in startups and privately held firms that dominate California’s innovation economy.
The initiative must collect nearly 875,000 signatures to qualify for the November 2026 ballot.
Why crypto and tech leaders object
Senior figures in the crypto industry have voiced strong opposition. Kraken co-founder Jesse Powell warned that the proposal could be “the final straw” for wealthy residents, arguing that billionaires would leave California along with their spending, philanthropy, and jobs.
Bitwise CEO Hunter Horsley echoed concerns, suggesting the tax would undermine confidence in the state’s investment environment.
Castle Island Ventures founding partner Nic Carter questioned whether policymakers had adequately assessed capital mobility in an era when wealth can move quickly across borders.
ProCap BTC chief investment officer Jeff Park raised similar concerns, noting that one-time wealth taxes could signal the potential for further levies in the future.
Fredrik Haga, co-founder and CEO of on-chain data platform Dune, pointed to Norway’s experience with a wealth tax, arguing it led to an exodus of wealthy individuals and raised less revenue than expected.
Austin Campbell, a New York University professor and founder of Zero Knowledge Consulting, cited a December audit by the California State Auditor that highlighted unaccounted-for or poorly justified public expenditures, questioning whether additional revenue would be efficiently deployed.
High-profile investors outside crypto have also weighed in.
Hedge fund manager Bill Ackman warned that California risks losing key business leaders.
Earlier reports said figures such as Peter Thiel and Larry Page were considering reducing their ties to the state.
Supporters say funds would back public services
US Representative Ro Khanna, a crypto-friendly Democrat representing California’s 17th Congressional District, has emerged as a leading defender of the proposal.
In a series of posts on X, Khanna argued that the tax would fund childcare, housing, and education, ultimately strengthening innovation and addressing public frustration over inequality.
He has emphasized that extreme wealth holders should contribute more to society.
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