Rep. Ro Khanna (D-CA) slammed an economic policy from Vice President Kamala Harris on Wednesday despite being a campaign surrogate for her.

Khanna joined CNBC's Squawk Box where hosts Joe Kernen, Andrew Ross Sorkin, and Rebecca Quick all expressed significant doubts on Harris's plan to tax unrealized capital gains. Harris's plan would add a 25% minimum tax on unrealized capital gains for anyone with a net worth over $100 million. The policy would force Americans to pay taxes on assets that appreciate in value throughout the year.

Khanna, who represents California's 17th District, which includes Silicon Valley, is not a fan of the Harris plan despite his support for the ticket. The policy, he argued, would hurt entrepreneurs and create an unhealthy environment for startup companies.

"Let's say you're an entrepreneur, you create a company, it gets to $100 million or $200 million on paper. Now if you're taxing that, you're probably going to force that person to sell it. They're probably going to sell it to private equity. Do you really want the entrepreneurs to be forced to sell their companies to larger institutions and to decline in value? I don't think that's what you want for a startup ecosystem," he said.

"Jeff Bezos wouldn't have to do that. They're going after these very -- I think the whole policy is demagoguing," Kernen responded.

Khanna recommended a system that taxes people on loans they take out against assets that have appreciated in value, arguing wealthy families use this loan strategy precisely to avoid taxes on unrealized gains.

"I get why," Khanna said about the Harris plan. "This is not the right way to do it, and also 90, 95% of investments in startups fail and so you're going to disincentivize investments in those startups.