SACRAMENTO, Calif. — SACRAMENTO, Calif. (AP) — Mark Zuckerberg has reached a deal with Meta’s board to help pay for a proposed California billionaire tax without losing his stake in the company he founded, according to regulatory filings released this week.
If passed by voters in the Nov. 3 election, the measure would levy a one-time 5 percent wealth tax on Californians whose net worth exceeds $1 billion. Zuckerberg is the sixth richest person in the world with an estimated net worth of more than $220 billion, according to Forbes. This would bring his tax liability to more than $11 billion.
The actions announced Wednesday by the tech giant will keep Zuckerberg as the company’s majority shareholder — and also give him the option to sell part of a new class of non-voting shares “for any reason,” including to pay potential wealth tax bills.
The compromise came after Zuckerberg told the board he was considering selling his Palo Alto home last month in anticipation of the proposed tax. But he then made the deal and agreed to stay in California for eight years, unless “significant unforeseen circumstances” arise that make it “prudent or advisable for him to reside elsewhere,” according to the filings.
A few hundred billionaires live in California, according to the nonpartisan Legislative Analysts Office. The tax would apply to anyone with a primary residence in the state starting January 1, 2026.
Most of the money would be used to offset cuts in federal health care funding, and 10 percent would be spent on education and food assistance programs. Supporters, including SEIU United Healthcare Workers West and Vermont Sen. Bernie Sanders, say it would help ensure the ultra-wealthy pay their fair share.
But opponents, including California Gov. Gavin Newsom, a Democrat, have warned it could prompt the state’s wealthiest to leave the state. This could lead to long-term budget problems, as the state relies heavily on the wealthy for tax revenue.
SEIU United Healthcare Workers West said the Zuckerberg deal proves naysayers wrong.
“This is the nail in the coffin of months of scare tactics claiming that billionaires are fleeing California,” Suzanne Jimenez, the union’s chief of staff, said in a statement.
Zuckerberg’s deal with Meta offers another glimpse into how the ultra-rich are preparing for the proposed tax, which targets the primary way they make money, through their investments, instead of raising taxes on the wages they receive from work. Other billionaires have taken a different approach in starting to cut ties with the state, including Google co-founders Sergey Brin and Larry Page.
Brin and other tech moguls and venture capitalists have invested millions in a political action committee opposing the proposed tax and supporting other ballot measures intended to overturn it. The committee, Building a Better California, has raised more than $333 million, 30 percent of which has come from Brin. For comparison, the “Yes on 40” campaign raised $32.7 million.
Zuckerberg has been paid a salary of $1 per year since 2013 as CEO of Meta. In its regulatory filings, Meta claimed that Zuckerberg would not receive additional compensation — and argued that he would “effectively pay to serve as CEO of the company while residing in California” if the state’s wealth tax were passed. The company said the new shares it would be allowed to sell – representing 10% of its overall economic stake in the company – would help alleviate this problem.
Beyond securing Zuckerberg’s future in California, Meta’s new share class aims to strengthen the company’s ability to raise capital for its artificial intelligence infrastructure investments, according to filings. Meta also said it created the new shares for employee compensation and acquisitions, among other reasons.
“This will expand our financing tools and give us the flexibility to invest as part of the unprecedented momentum we’re seeing in every part of our business, driven by AI,” Susan Li, Meta’s chief financial officer, said on an earnings call.
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Grantham-Philips reported from Chicago.
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