Crypto Executives Push Back Against Proposed Billionaire Tax in California

Crypto executives, including Bitwise CEO Hunter Horsley and Castle Island Ventures founding partner Nic Carter, have pushed back against a proposed billionaire tax in California. The proposed 5% tax on billionaires' wealth has drawn a strong response from crypto executives, who argue it would trigger an exodus of entrepreneurs and capital flight, and would be wasted anyway.

Background on the Proposed Tax

The ballot initiative, known as the 2026 Billionaire Tax Act, proposes a 5% tax on net wealth above $1 billion to help fund the health care system and state assistance programs. As the proposed wealth tax is partly assessed against unrealized gains, some billionaires may need to sell stock or parts of their businesses to raise funds to pay the tax, which would either be payable in one installment, or over five years with interest payments.

Concerns from Crypto Executives

Senior figures in the crypto industry, including Bitwise CEO Hunter Horsley and Kraken co-founder Jesse Powell, argue that the measure would only result in billionaires leaving the state, with a negative overall effect. “I promise you this will be the final straw. Billionaires will take with them all of their spending, hobbies, philanthropy, and jobs. Solve the waste/fraud issue,” Powell said in an X post on Sunday.

Defense of the Proposal

One of the key defenders of the proposals is US Representative Ro Khanna, a crypto-friendly Democrat from California’s 17th Congressional District. He has made the case for the tax in a series of X posts, arguing that it will fund better childcare, housing, and education, which, in turn, will be good for American innovation.

Potential Consequences

Castle Island Ventures founding partner Nic Carter and ProCap BTC chief investment officer Jeff Park also speculated that the tax would prompt billionaires to move all their capital out of the state. “I generally like Ro and have interacted with some of his staff who have always been fantastic, but I do wonder — have they done an analysis of capital mobility in response to wealth taxes?” Carter said on Sunday. Fredrik Haga, the co-founder and CEO of on-chain data platform Dune, argued that Norway had tried a similar tax and that it resulted in a mass exodus of the wealthy from the Nordic country, and raised less money than expected.

Alternative Solutions

Austin Campbell, a New York University professor and founder of Zero Knowledge Consulting, and Bitwise founder Horsley both pointed to a December audit from the California State Auditor, which highlighted issues with how taxpayer funds have been spent, including unaccounted-for or poorly justified expenditures. “But what Ro has a plan for is not pulling the fire alarm and fixing this. Rather what he’s been spending time on is a new private citizen asset confiscation to have more money for the government. Politicians have long forgotten their role is to be a servant,” Horsley said.

Conclusion and Future Outlook

The proposed billionaire tax in California has sparked a heated debate among crypto executives and politicians. While some argue that the tax will help fund important public services, others believe it will lead to a mass exodus of billionaires and capital flight. As the proposal moves forward, it remains to be seen how it will impact the state's economy and the crypto industry as a whole.