A proposal to introduce a new wealth tax in California has sparked a familiar threat from some of the state’s richest residents, including figures from the crypto industry, who say they may pack up and leave if the measure becomes law. While the warnings have been loud, history suggests that fears of a mass billionaire exodus may be overstated.
The controversy centres on a proposal put forward in November 2025 by the Service Employees International Union–United Healthcare Workers West. The union is seeking a 5% annual tax on residents with assets exceeding $1 billion, alongside a one-off levy of $1 billion on individuals worth more than $20 billion. The measure, which would tax wealth rather than income and include unrealised gains, is intended to plug funding gaps in California’s healthcare system following federal cuts. Before voters can even consider it, the proposal must gather 850,000 signatures to qualify for the November 2026 ballot.
Several high-profile billionaires and investors have already condemned the idea. Crypto exchange Kraken’s co-founder Jesse Powell described the proposal as outright theft, arguing that wealthy individuals would respond by taking their spending, philanthropy and jobs elsewhere. Bitwise chief executive Hunter Horsley warned that many of those who helped build California’s technology ecosystem were quietly considering relocation within the next year. Venture capitalist Chamath Palihapitiya went further, claiming that individuals with a combined net worth of $500 billion had already left the state.
Supporters of this argument say California risks shrinking its tax base if its richest residents depart, forcing either spending cuts or higher taxes on those who remain. Critics of the proposal also note that the ultra-wealthy already shoulder a disproportionate share of tax revenue and argue that capital is now more mobile than ever, particularly in crypto, where globally distributed businesses are increasingly common.
Yet evidence from other countries and US states suggests that wealthy individuals rarely follow through on threats to leave. Studies examining wealth taxes in Scandinavia found that fewer than 0.01% of the richest households relocated after reforms were introduced. In the UK, despite headlines about millionaire departures, less than 1% of the country’s wealthy population moved abroad in any given year. Researchers have consistently found that factors such as family ties, social networks and business roots make the ultra-rich far less mobile than public rhetoric implies.
Even within the United States, states that have raised taxes on high earners have not seen their millionaire populations collapse. Advocacy groups argue that while some movement is inevitable, it represents a tiny fraction of the wealthy and rarely undermines overall revenue.
For now, the California proposal remains hypothetical. It has yet to qualify for the ballot, let alone pass a public vote or receive gubernatorial approval. While some crypto billionaires may eventually choose to leave, past experience suggests that the threat of a sweeping wealth exodus is more likely a negotiating tactic than an economic inevitability.
