A cryptocurrency company has ignited debate after relocating its headquarters out of California due to a proposed wealth tax that some believe will be bad for business in the state.
The L.A. Times and SFGate reported that BitGo, a Palo Alto digital asset startup, has moved headquarters to Sioux Falls, South Dakota, according to a filing with the U.S. Securities and Exchange Commission.
The move comes as California considers a ballot initiative that would impose a one-time 5% tax on residents worth more than $1 billion. The Billionaire Tax Act is still gathering signatures, but it has already sparked pushback from some business leaders.
If approved, it would apply to roughly 200 of the state's wealthiest residents and could raise an estimated $100 billion, much of which would go toward healthcare.
This mirrors efforts around the world to raise taxes for the ultra-wealthy to fund initiatives such as the UN's Sustainable Development Goals.
BitGo's relocation has drawn attention because the company is preparing for an initial public offering targeting a valuation of nearly $2 billion. While the filing doesn't state why the company moved, CEO Mike Belshe has criticized the proposed tax.
"Who in their right mind would found a new business in California if California does this?" he wrote on X.
The topic is fueling discussion about businesses leaving California amid rising costs and regulatory pressure. Companies like Oracle and X have relocated in recent years. Google's co-founders also moved some businesses and bought homes in other states.
However, those in favor of the tax say fears of a mass exodus are overblown because most billionaires haven't taken steps to leave.
Beyond the wealth-tax debate, the controversy touches on a pressure point for the crypto sector. Crypto operations have seen criticism for their massive electricity demands. Not only does this strain resources and raise utility bills for locals, but it can also lead to increased planet-warming pollution if that energy comes from power grids reliant on coal, gas, and oil.
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$200 or more 💰 However, some crypto and data companies are moving more toward renewable-powered operations. In some cases, they even help finance new clean energy projects, and some say this could accelerate renewable development. Still, the growing industry raises questions about how quickly sustainable efforts can keep up with its rapid scale.
As voters consider whether the ultra-wealthy should pay more in taxes — and as crypto companies face scrutiny over energy use and environmental impact — BitGo's relocation shows how companies may push back if they find policy doesn't favor them.
As LinkedIn co-founder Reid Hoffman said on X, "Poorly designed taxes incentivize avoidance, capital flight, and distortions that ultimately raise less revenue."
Meanwhile, urban policy analyst Peter Dreier told Capital & Main, "Whenever business doesn't like being held accountable or having any standard set for its behavior by government, they say it'll kill jobs or that the businesses will move out. Ninety-five percent of the time they're lying."
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