Meta strikes deal to keep Zuckerberg in California amid wealth tax vote

MENLO PARK · Meta Platforms announced a deal Wednesday to keep its chief executive, Mark Zuckerberg, living in California for the next eight years. The agreement provides Zuckerberg with a new class of non-voting shares he can sell to cover a potential multi-billion-dollar tax bill. This liability could arise if California voters approve a ballot measure next month to tax the state's billionaires. Zuckerberg had told the company he was considering moving his primary residence out of California because of the proposal.

The company said it will create the new Class C common stock in January 2027. Zuckerberg, whose net worth is about $240 billion, can immediately sell 20 per cent of these shares, which represent 10 per cent of his total economic stake in Meta. This structure allows him to pay a potential tax bill without having to sell any of his voting shares and lose control of the company. A special committee of Meta's board said it was "critically important" that Zuckerberg remain in a leadership role at the Menlo Park headquarters. Meta said it faces "unprecedented challenge and competition in our industry" driven by artificial intelligence. The parent of Facebook and Instagram said it needs to raise "hundreds of billions of dollars" over several years to finance its AI growth plan, with capital needs beginning as early as fall 2026. The company argued that keeping Zuckerberg in California is vital during this period.

The ballot measure, Proposition 40, asks voters to impose a one-time 5 per cent tax on billionaires residing in California on Jan. 1. The state is home to as many as 250 billionaires with a collective net worth exceeding $2 trillion US. Proceeds from the tax would primarily fund state health care programs, with money also directed to food assistance and public education. Supporters estimate the measure could generate $100 billion US.

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Opponents dispute that figure, estimating revenue closer to $40 billion US and warning the tax could drive billionaires from the state. Google co-founder Sergey Brin has spent more than $100 million US to defeat the proposal. "I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don't want California to end up in the same place," Brin told the New York Times.

Proposition 40 has drawn support from some prominent Democrats, including California Representative Ro Khanna and Vermont Senator Bernie Sanders. "Are we destined to live in an oligarchic society begging for crumbs while our economic and political lives are controlled by a handful of the wealthiest people on Earth?" Sanders said at a recent California rally. However, the measure does not have unified Democratic backing.

Outgoing Democratic Governor Gavin Newsom opposes the wealth tax and supports a rival measure to ban such proposals after 2026. The California Teachers Association and Democratic gubernatorial candidate Xavier Becerra also oppose it, calling it an unsustainable funding mechanism. In contrast, Nvidia CEO Jensen Huang said he is willing to pay. "The fact that I can afford to pay $8 billion in taxes over five years is a privilege," Huang told CBS News. "It's a responsibility." A law professor who helped draft the proposal, Darien Shanske, told CNBC that moving would not shield billionaires from the tax if they were residents on the key date. A recent poll showed 46 per cent of respondents who took a position favoured the measure, while 43 per cent were opposed. Political analysts note California ballot measures often lose support over time, and a proposal polling below 50 per cent in August faces poor prospects.

With files from CBC News and BNN Bloomberg