Meta Platforms has agreed to give chief executive Mark Zuckerberg a new class of stock he can sell to cover a potential California wealth tax bill, in exchange for a promise to remain a resident of the state, or wherever Meta keeps its headquarters, for eight years.
The company disclosed the arrangement Wednesday, less than two weeks before California voters decide Proposition 40, a one-time 5% tax on residents worth $1 billion or more.
As reported on Reuters, The Guardian and other outlets, Zuckerberg had told Meta he was considering moving his primary residence out of the state because the measure could force him to sell voting shares to pay it.
Meta plans to issue nonvoting Class C common stock in January 2027, effectively a two-for-one split for all shareholders. At that point, Zuckerberg may sell 20% of the Class C shares he receives right away. That equals about 10% of his economic stake in the company, and selling it would not weaken his hold on the vote.
A special committee of Meta’s board concluded it was “critically important” that Zuckerberg stay in a leadership role and run the company from California. The committee cited what it called “unprecedented challenge and competition in our industry” driven by artificial intelligence.
Assuming Forbes' current estimate of Zuckerberg's net worth at roughly $240 billion is accurate, he would be facing a 5% levy totaling approximately $12 billion, though the measure’s valuation rules would set any actual bill.
Advisors who work with founders and holders of concentrated stock can read the deal as an early model of how controlled companies may respond to the state-level push to tax billionaires’ balance sheets: create liquidity and keep the vote.
The measure covers billionaires who were California residents on Jan. 1, 2026. It reaches public stock, private business stakes and venture holdings but generally excludes real estate, pensions and retirement accounts. Most of the revenue would go to state healthcare programs to offset cuts tied to the One Big Beautiful Bill Act, which President Trump signed in 2025.
Backers project the state measure would yield about $100 billion from the state’s roughly 200 to 250 billionaires, while the nonpartisan Legislative Analyst’s Office expects “tens of billions of dollars” over several years.
A Hoover Institution study puts the revenue at $30 billion, though it also projects a net present value of negative $38.9 billion once lost income tax from departing billionaires is taken into account.
Alan Auerbach, an economics professor at the University of California, Berkeley, has doubts. “There is nothing in the proposition to keep the tax from being imposed again in the future, and recent history suggests it will be,” he told CNBC.
Darien Shanske, a UC Davis law professor who helped draft the measure, rejected that view. “It is a one-time tax for a one-time emergency,” he said to the news outlet. “Any further taxation would need to be voted on again.”
A September poll by the UC Berkeley Institute of Governmental Studies found 45% of likely voters in favor, 42% opposed and 13% undecided. In the same survey in March, the measure led by 19 points. Prediction market platforms Kalshi and Polymarket put its odds of passage below 30%.
Two rival initiatives on the same ballot could still defeat it. Proposition 42 would bar new retroactive taxes on personal assets. Proposition 41 would void new taxes that breach state spending limits. The analyst’s office has said courts could block Proposition 40 if either rival measure gets more “yes” votes.
Gov. Gavin Newsom, who has split with his own party over the tax, endorsed Proposition 42 on Oct. 9. “Wealth is movable, and it shops for the state with the lowest taxes,” he wrote in a June Substack post.
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