How Mark Zuckerberg Pushed Meta to Protect Him From California’s Proposed Wealth Tax

Mark Zuckerberg was running out of time.

A historic tax on billionaires was looming on the ballot in his home state of California, and he needed the board of Meta, his technology company, to take steps to protect against it.

Mr. Zuckerberg had been negotiating with Meta’s board since July. At a dinner with board members on September 9, he effectively gave them an ultimatum: If a deal was not reached, he would sell his house in Palo Alto and the announcement would be public. He planned to put the house up for sale Sept. 13, he said, giving the board 96 hours to avoid a public relations crisis.

Meta, based in nearby Menlo Park, worked to find a solution. On Wednesday, the company revealed the result: In January, it will issue a new class of shares to shareholders, which Mr. Zuckerberg can sell to pay the potential wealth tax without reducing his 60.6% voting rights at the Silicon Valley company. It also helps the tech giant finance its huge investments in artificial intelligence.

The back-and-forth between Mr. Zuckerberg and Meta was detailed in an extraordinary tranche of documents filed Wednesday with the Securities and Exchange Commission. These documents pull back the curtain, in great detail, on how billionaires like Mr. Zuckerberg — whose net worth is $247 billion — are managing the risk posed by California’s proposed tax. The documents also reveal Mr. Zuckerberg’s influence on the board of directors of Meta, a company with which he has been inextricably linked since he founded it in his Harvard dorm room in 2004.

Meta declined to comment.

Mr. Zuckerberg’s decision to preemptively restructure his stock holdings shows how much Silicon Valley fears that the tax measure, Proposition 40, will pass in the Nov. 3 midterm elections. The proposal called for a one-time 5% tax on all assets of billionaires who lived in California starting January 1, 2026.

Given his estimated net worth, Mr. Zuckerberg, 42, could owe nearly $12.5 billion in taxes. But even billionaires don’t have such amounts of money. If he were to sell his existing Meta shares – known as “supervote” shares, which give him more voting power within the company – to pay this tax, his voting power could be reduced to 53%, Meta said in the filings.