David Sacks Slams California Wealth Tax as 'Asset Seizure'

At the World Economic Forum in Davos, AI czar David Sacks issued a stark warning about California's proposed wealth tax, calling it "an asset seizure" rather than a tax. The longtime venture capitalist and billionaire warned that if approved, the measure would mark the beginning of something "very new and different" in the United States.

The proposal, known as "The Billionaire Act," would impose a one-time 5% tax on California residents with a net worth exceeding $1.1 billion. While the tax has not yet been approved, it has already triggered significant movement among the state's wealthiest residents, with some relocating assets to avoid potential liability.

Sacks, who serves as an AI czar for the White House and co-founded Craft Ventures with Bill Lee, delivered his criticism on the sidelines of the World Economic Forum. His comments reflect growing concern within the tech industry about the proposed tax's potential impact.

"This is not a tax, this is an asset seizure," Sacks told CNBC.

The venture capitalist emphasized that the measure represents more than a single policy change. According to Bloomberg, Sacks himself is a billionaire who could be subject to the tax if it becomes law.

His relocation to the Austin area in December, announced by Craft Ventures, came ahead of any potential tax implementation, suggesting early awareness of the proposal's trajectory.

The proposed legislation would create a 5% tax on assets for California residents with a net worth exceeding $1.1 billion. Residents with net worth between $1 billion and $1.1 billion would face a smaller, graduated tax.

While Sacks acknowledged the proposal is currently limited in scope, he argued it represents a dangerous precedent.

"It's not a one-time. It's a first time," Sacks said. "And if they get away with it, there'll be a second time and a third time."

The warning comes as California remains home to more billionaires than any other state. The tax has yet to be approved, with supporters still gathering signatures to place the issue before voters in November.

Even before a vote, the proposal has prompted action from some of the state's wealthiest residents. Google cofounders Larry Page and Sergey Brin moved entities tied to them out of California ahead of the deadline.

However, not all billionaires are fleeing. Nvidia CEO Jensen Huang has publicly stated he will not leave the state despite the potential tax.

The wealth tax faces multiple hurdles before becoming law:

• Signature gathering must meet threshold requirements
• A majority of voters must approve it in November
• Legal challenges are expected to follow

The exodus of high-net-worth individuals has already drawn concern from state leadership.

Governor Gavin Newsom has faced criticism for his handling of the proposal. Sacks suggested the governor deserves blame for not opposing the tax sooner, though Newsom's office has denounced the measure for months.

The governor, viewed as a potential 2028 presidential candidate, has intensified his opposition in recent weeks.

"I'll do what I have to do to protect the state," Newsom told The New York Times.

Newsom has expressed particular concern about the departure of billionaires from California, viewing it as validation of his warnings.

"This is my fear. It's just what I warned against," Newsom told Politico. "It's happening."

The political tension highlights the broader debate about wealth inequality and taxation in California, a state with the nation's highest concentration of billionaires.

The "Billionaire Act" represents a pivotal moment in California's approach to wealth taxation, with implications that extend far beyond the state's borders. As supporters continue gathering signatures, the debate has already reshaped conversations about tax policy and wealth mobility.

Legal experts anticipate significant constitutional challenges should the measure reach the ballot and pass. The outcome will likely influence similar proposals in other states considering wealth taxes.

For now, the proposal remains in limbo—its fate dependent on voter signatures and eventual ballot box decisions. The warning from figures like Sacks and the exodus of some billionaires suggest the debate over taxing extreme wealth has moved from theoretical to tangible.