Crypto tycoon threatens to leave California! Will the 5% wealth tax collect 100 billion or scare people away?

California union proposes a 5% wealth tax on residents with assets over $1 billion, expected to collect $100 billion from 200 people. The market calls this theft, and Bitwise CEO Hunter Horsley states that billionaires are discussing leaving. However, historical data shows that after wealth taxes are implemented in Norway, Sweden, and the UK, the relocation rate among the wealthy is less than 0.01%, with only 1% in the UK. Family social networks and business knowledge make the wealthy reluctant to move.

$100 Billion Wealth Tax Proposal Sparks California Politics

The Service Employees International Union - Western Healthcare Workers Union submitted this new tax policy proposal in November 2025. The union states that this new tax would levy up to $100 billion from 200 California residents, enough to offset federal cuts to California’s state healthcare programs. The proposal requires 850,000 signatures to be submitted for voter referendum in the November 2026 election.

This wealth-based tax effectively taxes unrealized gains. For crypto billionaires, this means that even without selling Bitcoin or other crypto assets, as long as the paper value increases and total assets exceed $1 billion, they must pay a 5% wealth tax annually. Additionally, the proposal would impose a one-time $1 billion tax on residents with assets over $20 billion, provoking strong backlash due to its progressive punitive nature.

Some well-known California investors and billionaires, such as PayPal co-founder Peter Thiel and Google co-founder Larry Page, have already threatened to leave California. The market calls this measure theft and says it will be the last straw that breaks the camel’s back, with billionaires taking their spending, hobbies, philanthropy, and jobs elsewhere.

Hunter Horsley, CEO of Bitwise, said: “Many contributors to this state are quietly discussing leaving or have already decided to leave within the next 12 months.” He added that billionaires are likely to follow a purportedly growing trend—expressing their views not through voting but by voting with their feet.

Historical Data Contradicts: Relocation Rate Less Than 1%

However, threats of wealth withdrawal from crypto billionaires are not new, and past experience shows such threats may be exaggerated. In 2024, the UK advocacy organization Tax Justice Network published a report on this topic. The report found that after wealth tax reforms in Norway, Sweden, and Denmark, fewer than 0.01% of the wealthiest families relocated.

Global Billionaire Relocation Data

Post Nordic Wealth Tax Implementation

· Norway, Sweden, Denmark: relocation rate among the wealthiest families below 0.01%

· Wealth taxes did not trigger the expected large-scale outflow

· Tax revenue successfully used for social welfare programs

UK 2024 Case Study

· Net outflow of 9,000 millionaires, ranking second in the world

· But this accounts for only about 1% of the total approximately 3 million millionaires in the UK

· Tax Justice Network: Millionaire migration rate has remained below 1% since 2013

US State Cases

· After Washington and Massachusetts increased taxes,

· The number of individuals with net worth over seven figures continues to grow

· Both states have gained substantial fiscal revenue for state programs

Mark B. Munsell, Communications Director at Tax Justice Network, stated: “There is no such thing as a millionaire exodus. If you look at the migration data published since 2013, you will find that the migration rate of millionaires remains below 1% annually, both globally and nationally. Based on the data itself, the liquidity of millionaires is actually very low.”

(Source: Inequality.org)

A 2024 paper from the London School of Economics found that ultra-rich individuals are quite attached to their residences, with no respondents at the 1% tax bracket indicating they would leave the UK. This attachment stems from family, social networks, and local business knowledge. Advocacy organization Inequality.org, which focuses on US wealth distribution, states, “While some tax avoidance behaviors are inevitable, the proportion of wealthy people migrating solely for tax reasons is a small part of their social class.”

Inequality.org cites data from the Policy Research Institute and the State Fiscal Analysis Initiative, indicating that high-income earners are often reluctant to move because of family, social networks, and local business knowledge. The value of these soft factors often far exceeds the savings from tax incentives.

Crypto Billionaires’ Real Considerations and Political Statements

(Source: Cato Institute)

Former Facebook executive and well-known venture capitalist Chamath Palihapitiya claims that billionaires with a net worth of $500 billion have already left the state. He notes that opponents of the tax generally believe that while the tax might benefit the state’s finances in the short term, California’s budget deficit will only grow larger.

Horsley further analyzes: “When billionaires leave, tax revenue also decreases. If revenue declines, the state government will need to cut spending, programs, or benefits, or raise taxes on those who stay.” This argument is supported by conservative think tanks like the Cato Institute, which argue that high-income earners pay too much income tax.

However, Nic Carter, partner at Castle Island Ventures, believes the cryptocurrency industry may be better equipped to handle the adverse effects of new taxes. He states that capital is more flexible than ever, and decentralized or global startups are now commonplace. White House crypto and AI affairs head David Sacks politicized the issue, claiming California’s wealth tax is designed to fund large-scale fraud.

California’s tax proposal has not yet been put on the ballot, let alone passed or approved by the governor. California may lose some crypto billionaires, but the increased tax revenue could offset this loss. Both historical data and academic research show that the threat of billionaire relocation is often greater than actual action.