Heavyweights in the crypto and technology sectors are sounding the alarm over a proposed tax law in California, warning it could lead to an exodus of wealth and capital flight.
The act, the Billionaire Tax Act 2026is supported by Service Employees International Union-United Healthcare Workers West and proposes a 5% tax on net worth above $1 billion. The purpose of the tax is to help fund the health care system and state aid programs.
Excerpt of the proposed tax law (Source: OAG)
Crypto industry executives warn the tax will do more harm than good
One of the proposal’s main defenders is crypto-friendly US Representative Ro Khanna. In a series of X posts, he advocated for the tax, saying it will help fund better childcare, housing and education. This in turn, he argued, would be good for American innovation.
Several crypto industry executives have voiced opposition to the proposed tax law. One of the main points of contention for the proposal is that the tax will also be levied on paper profits that have not yet been realized. Critics argue that the tax on unrealized gains would force the sale of shares and assets to cover costs.
Among the crypto and technology leaders who have reacted strongly to the proposed tax law is Kraken co-founder Jesse Powell. He said in a December 28 message that this tax, if implemented, “will be the final straw.”
A 5% theft of unrealized profits and wealth taxes that have already been paid is about the most retarded thing I’ve ever heard. I promise you this will be the last straw. Billionaires will carry all their expenses, hobbies, philanthropy and jobs with them. Solve the waste/fraud problem. https://t.co/DKcNWni2kB
— Jesse Powell (@jespow) December 28, 2025
“Billionaires will take all their spending, hobbies, philanthropy and jobs with them,” Powell warned.
Bitwise CEO Hunter Horsley reiterated these warnings. “Many who made this state great are quietly discussing leaving or have decided to leave in the next 12 months,” he said. said.
Wealth taxes are not always effective
Dune co-founder and CEO Fredrik Haga argued that taxes on the rich don’t always work, noting that Norway had tried a similar tax. This resulted in a mass exodus of the wealthy from the Scandinavian country, Dune’s CEO said. Less money was also raised than expected.
“Friendly reminder to California: taxes on unrealized capital gains have caused more than half of the wealth of Norway’s top 400 taxpayers to move abroad,” Haga said.
“Norway has become more equal and made everyone poorer and worse off, just as expected from strong socialist ideas.”
Questions arise about how the money would actually be spent
In addition to warnings of a wealth exodus and capital flight, questions have also been raised about whether the money will achieve its intended goals.
A New York college professor and founder of the Zero Knowledge Consulting firm, Austin Campbell, be to a December audit by the California State Auditor. The audit revealed problems in how taxpayer money was spent, including unaccounted or poorly justified expenditure.
Pro-crypto attorney John Deaton also pointed to the audit, saying Khanna should first focus on the recently reported $70 billion in fraud before going after the wealthy with the proposed tax.
Afterwards it is clear @RoKhannaLet’s tax unrealized profits and confiscate private party positions. When government and affordability fail, the Democratic Party’s instinct is not for reform or accountability – but for punishment. Tax success. Tax on unrealized profits. Avoid liability altogether… https://t.co/Mwx7fE7LJL
— John E. Deaton (@JohnEDeaton1) December 28, 2025
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