California is about to take action against billionaires. Recently, there has been a lot of buzz—a proposal plans to impose a one-time 5% wealth tax on individuals and corporations with a net worth exceeding $1 billion, with a vote expected in November 2026. Once the news broke, big names in the tech and crypto circles were immediately outraged.

This measure, officially named the "2026 Billionaire Tax Act," is primarily aimed at easing the state's fiscal pressure—its healthcare system and state assistance programs are running out of funds, and lawmakers came up with this idea. It seems straightforward, but the problem is that this tax is based on unrealized gains—meaning, it applies to the appreciation on paper, not just realized profits.

This creates a tricky situation. Many billionaires hold most of their wealth in stocks and digital assets, which have high unrealized gains, but their actual cash flow may not match. According to the rules, taxpayers would need to sell stocks or parts of their businesses to pay this tax. It sounds considerate—payable all at once or in five installments—but in reality, it forces holders to sell assets.

Why are the tech and crypto communities so upset? Simply put, California is the hub of Silicon Valley and many crypto projects. If this tax really goes into effect, capital and talent are likely to flee the state. Some corporate executives and investors are already considering moving assets and operations to other states or abroad. How this develops over the next few months is closely watched by the market. Currently, this initiative (ID 25-0024A1) has been submitted to the California Attorney General, and its scope is limited to taxpayers residing in California after January 1, 2026.