President Donald Trump’s artificial intelligence and crypto czar David Sacks on Wednesday criticized California’s proposed wealth tax on billionaires, calling it a “scary direction” for the U.S.

“This is this is not a tax, this is an asset seizure,” the venture capitalist told CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland.

“Never been anything like this before in American history,” he added.

The Billionaire Tax Act, which is currently collecting signatures to be added to the November ballot in California, proposes a one-time 5% tax on the total wealth of residents with $1 billion or more in net worth. The tax would apply to California residents as of Jan. 1, 2026.

Sacks insisted that “it’s not a one-time, it’s a first time.”

“And if they get away with it, there’ll be a second time and a third time. And this will be the beginning of something new and different in this country, which is asset seizure,” he said.

Sacks, who has relocated to Texas after three decades in California, believes the legislation has a “good chance” of passing and could set a precedent for similar bills in other states.

He called out Gov. Gavin Newsom for his delayed opposition to the bill, which he argued has caused a trillion dollars of net worth to leave the state and put a “huge hole” in tax collections.

Despite the tax, CEOs like Nvidia‘s Jensen Huang and OpenAI’s Sam Altman have indicated plans to stay in the state. Airbnb CEO Brian Chesky also told CNBC this month that he’ll remain in California.

But Sacks said smaller businesses in California are more flexible and opting to leave.

“They’ve got large companies in the state, and California’s network effect is powerful,” he said of large businesses like Nvidia. “That’s why progressives think they can get away with this.”