California faces a growing political and economic clash as the state’s proposed 2026 Billionaire Tax Act — a one-time 5 percent wealth levy on residents with more than $1 billion in assets — ignites resistance from major tech and crypto leaders warning of business flight and broader innovation decline. Opponents argue that targeting unrealized gains and massive valuations harms entrepreneurship and could push key founders and capital out of the state.
The measure would impose a one-time, 5 percent tax on the net worth of Californians exceeding $1 billion, including unrealized gains on stock and private holdings. The tax would apply to those living in the state as of January 1, 2026, with payment due in 2027 and options to spread payments over several years. A significant portion of the projected tens of billions in revenue is intended for healthcare services.
Silicon Valley founders and investors — especially from tech and cryptocurrency sectors — have publicly objected. Palmer Luckey, co-founder of defense technology firm Anduril, said the tax could force entrepreneurs to liquidate large holdings in their companies to pay massive bills, threatening long-term business continuity and investment. Wealth managers and industry figures argue that taxing unrealized wealth sets a precedent likely to destabilize startups and investment ecosystems.
High-profile billionaires including Peter Thiel and Google co-founder Larry Page reportedly are considering exiting California to avoid the proposed tax. Critics paint the ballot initiative as a tipping point that could accelerate an ongoing migration of high-net-worth individuals and businesses to states such as Texas and Florida, which have more favorable tax regimes.
Conservative economic analysts warn that such a tax undermines California’s pro-business climate and could reduce long-term state revenue. They point to broader patterns of domestic migration away from high-tax states toward lower-tax states, a trend that reshapes job growth and investment flows nationally. Opponents also claim the tax would diminish job creation, slow innovation, and discourage risk-taking among entrepreneurs who drive much of the United States’ economic growth.
Supporters of the measure, including the Service Employees International Union–United Healthcare Workers West, argue the revenue is critical to address funding shortages in public services, particularly healthcare. However, detractors — including some business groups and Republican lawmakers — frame the tax as punitive and counterproductive to economic progress.
