The California Wealth Tax is on the ballot next month and one of the people most likely to take a huge hit if it passes is Mark Zuckerberg. Recently, Zuckerberg went to Meta and warned them that he would need to leave California if the wealth tax passed.
Forbes has estimated that Zuckerberg is worth about $220 billion and would owe about $11 billion if the tax passes. But in Zuckerberg’s case, the issue isn’t just about holding on to his money. The bigger issue is retaining control of the company. Currently Zuckerberg owns about 13 percent of Meta’s stock. However, because of Meta’s dual class stock structure, that 13 percent gives him just over 60 percent of the voting rights in the company.
Last month, Zuckerberg told Meta’s board that if he were forced to pay the tax, he’d have to sell stock to do it and that would reduce his voting control to a little over 50 percent.
Zuckerberg owns about 13.4% of Meta but controls 60.6% of the votes. His Class B shares carry ten votes each. Those shares become ordinary one-vote shares when he sells them. Selling enough to pay the tax could cut his voting power to about 53%, the filing says.
And if he were going to be in danger of losing control of the company, then Zuckerberg was prepared to leave California.
At a board dinner on 9 September, he said he would list his Palo Alto home on 13 September. Both sides agreed terms on 14 September.
The new agreement creates a new class of stock called Class C. This stock has no voting power.
Every Meta shareholder will get one new Class C share, which carries no vote, for each share they own. The change takes effect on 19 January 2027. It works like a two-for-one stock split, Meta said in its third-quarter results…
Under the deal, he can sell 20% of his new Class C shares straight away. That equals 10% of his economic stake in Meta. The rest is released at 2.5% a quarter while he stays in charge.
In return, he will live in California, or wherever Meta is based, for eight years while he leads it. “Material unforeseen circumstances” are the only exception.
So Zuckerberg is still going to have to sell stock if the tax passes, but by selling the Class C stock, he can maintain his 60 percent voting control of the company. In exchange, he’s stuck in California for eight years.
But this is not a done deal yet. Recent polls show that voters have been turning on the new wealth tax. There’s a very real chance it won’t pass.
Proposition 40, a proposed one-time 5% wealth tax on billionaires that would primarily fund health care, faces opposition from 52.6% of voters, compared with 34.5% in support, with 11.5% undecided, according to a new California Post poll conducted by McLaughlin & Associates.
“Voters just don’t trust Sacramento politicians when it comes to taxes. Whenever pollsters ask should we raise taxes on billionaires? People say why not but naturally when we ask should they raise taxes on you? People say no- especially when affordability is the top issue,” said pollster John McLaughlin.
“However, message that Prop 40 was poorly written that there’s a loophole which could raise taxes on many more people than just billionaires is resonating. The fact that this won’t be a just one time tax, but a recurring tax cut n many more people is resonating,” McLaughlin added.
Hopefully, California voters will realize this is a bad idea whose upside has been vastly overstated.
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