California’s 2026 Billionaire Tax Act Could Trigger Capital Flight, Crypto Executives Warn About 5% Wealth Tax

According to Cointelegraph via COINOTAG News, California is proposing a 5% billionaire wealth tax under the 2026 Billionaire Tax Act. The plan would apply to net worth above $10 billion to fund healthcare and state aid programs, pending voter approval.

Analysts warn the policy could trigger capital flight and entrepreneur outflows, jeopardizing innovation ecosystems. The treatment of unrealized gains and the choice between lump-sum or five-year payments may pressure asset holders to rebalance portfolios.

Cryptocurrency veterans, including Bitwise CEO Hunter Horsley and Kraken co‑founder Jesse Powell, contend the measure risks driving billionaires out of the state and diminishing funding for early-stage projects and crypto infrastructure.

This fiscal debate underscores how tax design affects liquidity, capital deployment, and the blockchain sector, demanding careful policy craft that balances fiscal needs with incentives for innovation.