Business

Mark Zuckerberg Cuts Deal With Meta Board To Keep Him From Fleeing California

via Wikimedia Commons

Meta CEO Mark Zuckerberg agreed to remain in California if voters pass an initiative to tax billionaires after striking a deal with the company’s board.

Zuckerberg previously told Meta’s board he would consider moving his primary residence out of California if Proposition 40, a ballot initiative that would impose a one-time 5% tax on the wealth of billionaires, passes. The company agreed that Zuckerberg would receive non-voting shares he could sell to cover a potential wealth tax bill in exchange for his commitment to remain in California, where Meta is headquartered.

Zuckerberg has a $224 billion net worth, making him the sixth richest man in the world, according to Forbes. He could immediately sell 20% of the Class C shares he receives, representing 10% of his overall economic stake in the company, according to Reuters.

Meta said Wednesday that it planned to issue a new class of non-voting Class C common stock in January 2027 to help fund acquisitions and keep top talent while maintaining Zuckerberg’s control of the company, according to Fox Business.

If passed, the tax would be due in 2027, although payments could be spread over five years at an additional cost. Real estate, retirement accounts and pensions would generally be excluded. The initiative intends to provide financial assistance following the federal and state-level cuts to healthcare, food assistance and K-14 public education programs, according to the California Budget & Policy Center. It would create a special fund, the 2026 Billionaire Tax Reserve Fund, to hold the revenue.

Zuckerberg bought a $170 million mansion in Miami, Florida, just three doors down from former Amazon CEO Jeff Bezos, who left Washington state around the time it imposed a 9.9% tax on household earnings exceeding $1 million per year. Former Starbucks CEO Howard Schultz moved from Seattle to Miami after the tax was imposed.

Some individuals expressed concerns about the measure being a one-time tax that would only be available for a few years, according to the California Budget & Policy Center. It would not be available to support other state services and there is uncertainty over how billionaires would respond to the tax.

There is a degree of uncertainty in estimating the potential revenue from this measure, though the Legislative Analyst’s Office estimated that it would likely raise “tens of millions” of dollars in the near term. It could reduce state income tax collections by roughly $1 billion per year.

Democratic California Gov. Gavin Newsom opposed Proposition 40, arguing that it would not fund public schools, housing, child care and other important programs.

“I understand the anxiety driving the wealth tax proposal in California. But I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending. It ignores our public schools, as the California Teachers Association has rightly pointed out, by failing to provide sustainable funding that our communities, parents and children deserve,” Newsom said.

“It turns a blind eye to safety-net clinics and reproductive healthcare providers that Planned Parenthood has fought for decades to protect,” Newsom continued. “There is nothing for housing, nothing for childcare, nothing for public safety workers who must answer 911 calls, and nothing for our public universities that have powered California’s economy for a decade.”

Some Democrats, including California Rep. Ro Khanna, supported the measure.