Meta Strikes Deal to Keep Zuckerberg in California as Wealth Tax Vote Nears

Meta Platforms has reached an agreement with chief executive Mark Zuckerberg after he raised the possibility of leaving California over a wealth tax measure on the Nov. 3 ballot, Reuters has reported. The company announced the arrangement on Wednesday.

Under the deal, Zuckerberg will receive non-voting shares that he can sell to pay a potentially massive tax bill if voters approve Proposition 40. In exchange, he has committed to remain a resident of California, or wherever Meta has its headquarters, for eight years.

Zuckerberg, the world's sixth richest person according to Forbes, had told Meta he was weighing a move of his primary residence out of the state. He feared the tax could force him to sell voting shares and lose control. Meta said he must keep running the company from its Menlo Park headquarters during a period of "unprecedented challenge and competition in our industry." The company added that it needs to raise "hundreds of billions of dollars" over several years to finance its AI-related growth plan.

Meta will create a new class of non-voting Class C common stock in January 2027. Zuckerberg, whose net worth is about $240 billion, can sell 20 per cent of the Class C shares he receives right away. That amounts to 10 per cent of his overall economic stake and would let him cover a Prop 40 bill without giving up voting control.

Proposition 40 would impose a one-time 5 per cent tax on California's billionaires and needs more than 50 per cent of the vote to pass. The state has as many as 250 billionaires worth upwards of $2 trillion US combined. State health care programs would gain the most from the proceeds, with money also going to food assistance and public education.

Supporters say the measure would raise $100 billion US, but skeptics put the figure closer to $40 billion US and warn that it could push wealthy residents out, costing the state future revenue and investment. Google co-founder Sergey Brin has spent more than $100 million US fighting it. He told the New York Times he fled socialism with his family in 1979 and does not want California to end up in the same place as the Soviet Union. Darien Shanske, a University of California-Davis law professor who helped draft the proposal, told CNBC that moving would not shield billionaires, since anyone living in the state on Jan. 1 would still be taxed.

The debate does not break down neatly along party lines. Rep. Ro Khanna and Sen. Bernie Sanders back the measure, while Nvidia CEO Jensen Huang has brushed it off, saying being able to pay $8 billion in taxes over five years is "a privilege." Outgoing Gov. Gavin Newsom opposes Prop 40 and supports Brin's Proposition 42, a constitutional amendment that would ban such taxes. Democratic gubernatorial candidate Xavier Becerra and the California Teachers Association also oppose Prop 40, calling it complex and unsustainable, while Republican candidate Steve Hilton is firmly against it.

Passage is far from certain. California voters have historically approved only one in three citizen initiatives, and analysts say undecided voters tend to lean toward No. A Citrin-Politico poll released this week found 46 per cent of respondents with a position favoured Prop 40, while 43 per cent were opposed.