In a significant backlash, major players from the crypto and tech industries are taking a firm stand against California’s proposed one-time 5% wealth tax. This new measure is expected to affect individuals with a net worth exceeding $1 billion, imposing taxes on unrealized gains—those gains that reflect asset values on paper even before any sale occurs.
The tax proposal, according to its supporters, aims to generate funding for vital health programs and services, with estimates suggesting it could raise up to $100 billion by taxing roughly 200 ultra-wealthy residents in the state.
Understanding the Tax Structure
The initiative is set to take effect on January 1, 2026, targeting the net worth of individuals and taxing unrealized gains such as stocks and company holdings, which will be assessed at their market value. Taxpayers will have the option to pay the tax in a single lump sum or over five years, with applicable interest for those who choose the latter. For example, an individual with $20 billion in assets would owe approximately $1 billion under this tax proposal, while someone with over $200 billion could face liabilities exceeding $10 billion.
A 5% theft of unrealized gains and assets taxes were already paid on is about the most retarded thing I’ve ever heard. 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. https://t.co/DKcNWni2kB
— Jesse Powell (@jespow) December 28, 2025
As reactions pour in, industry leaders caution that the proposed tax could instigate a mass exodus of wealth and talent from California. High-profile voices, including renowned crypto and tech executives, warn that the abrupt imposition of such significant tax obligations could compel individuals to sell off assets or relocate to more favorable tax jurisdictions, raising concerns about the broader impacts on job creation and investment.
I say this with no joy as a California resident:
Many who’ve made this state great are quietly discussing leaving or have decided to leave in the next 12 months.
More generally, one of the fascinating developments of this decade is people voting their views not with the… https://t.co/bTlBnsYdnY
— Hunter Horsley (@HHorsley) December 27, 2025
Proponents of the tax argue that it would only act on a small fraction of extremely high-net-worth individuals, paving the way for essential public services such as healthcare, education, and food programs without affecting taxes for middle-income earners. Representative Ro Khanna is a notable supporter, emphasizing that the revenue generated will bolster public services.
However, the practicalities of enforcement remain murky. While 5% of significant sums can accumulate rapidly, concerns hinge on previous instances where wealth taxes yielded less than anticipated revenue due to taxpayer migration or asset relocations. Moreover, assessing the value of private companies and fluctuating assets like cryptocurrency presents considerable hurdles, adding layers of complexity to the tax’s administration.
Featured image from Pexels, chart from TradingView
