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Meta agrees to let Mark Zuckerberg remain in California amid proposed billionaire wealth tax
· Confirmed
In Short: Meta CEO Mark Zuckerberg has agreed to remain in California for eight years to avoid a proposed billionaire tax, according to regulatory filings published this week.
Meta CEO Mark Zuckerberg has agreed to remain in California for eight years to avoid a proposed billionaire tax, according to regulatory filings published this week. Fox Business and the New York Post reported that Zuckerberg had considered moving his primary residence out of California due to Proposition 40, a ballot initiative that would impose a one-time 5% tax on the net worth of billionaires who were California residents on Jan. 1, 2026.
Both Fox Business and the New York Post noted that Zuckerberg’s net worth is approaching $250 billion, making him the world’s sixth-richest person. However, the New York Post added that Zuckerberg’s wealth is largely derived from his 13% ownership stake in Meta, which includes specialized Class B shares that give him majority shareholder voting rights.
According to the filings, Zuckerberg can sell 20% of the new non-voting Class C shares he receives, representing 10% of his overall economic stake in the company, to help pay the tax without giving up voting control. The New York Post reported that Zuckerberg stated the tax liability could be large enough to reduce his voting interest in the company to approximately 53% if he needed to sell down his Class B common stock.
The New York Post and Fox Business both detailed that Zuckerberg had held negotiations with Meta’s board about moving out of California if the state passed Prop. 40. The filings revealed that Zuckerberg intended to place his $110 million Palo Alto compound on the market by mid-September to establish residency elsewhere before the Nov. 3 election.
The BBC (United Kingdom) and Thestar (Canada) reported that California is home to many of the US's technology giants and around 225 billionaires reside in the state. The BBC noted that Zuckerberg’s wealth is estimated to exceed $200 billion, while Thestar (Canada) reported that Zuckerberg’s estimated net worth is about $239 billion, according to Forbes.
The filings also revealed that Meta plans to issue a new class of non-voting Class C common stock in January 2027 to help fund acquisitions and retain top talent while maintaining Zuckerberg’s control of the company. The New York Post and Fox Business reported that the special committee of independent directors unanimously recommended the new stock class.
The New York Post and WIRED both reported that Zuckerberg can sell 20% of the new shares to help pay any taxes he may owe, with the remaining 80% available for sale in chunks over the next eight years as long as he remains in California.
The filings also noted that Zuckerberg’s agreement includes a commitment to remain a resident of California, or the state where Meta maintains its headquarters, for eight years. The New York Post and Fox Business reported that the special committee emphasized the importance of Zuckerberg remaining in California to maintain close coordination with Meta’s management and proximity to its Superintelligence Labs.
The New York Post and Fox Business reported that Zuckerberg had warned the board that he was considering selling his Palo Alto home last month in anticipation of the proposed tax. The filings revealed that Zuckerberg had detailed negotiations with the board about moving out of California if the state passed Prop. 40.
The filings also noted that the special committee was mindful about the difficulties the company faced during the COVID-19 pandemic when Zuckerberg could not be physically present with the company’s management team and did not want the company to face similar challenges going forward.
The filings revealed that Zuckerberg’s agreement includes a commitment to remain a resident of California, or the state where Meta maintains its headquarters, for eight years. The New York Post and Fox Business reported that the special committee emphasized the importance of Zuckerberg remaining in California to maintain close coordination with Meta’s management and proximity to its Superintelligence Labs.
The filings also noted that the special committee was mindful about the difficulties the company faced during the COVID-19 pandemic when Zuckerberg could not be physically present with the company’s management team and did not want the company to face similar challenges going forward.
Background
Meta CEO Mark Zuckerberg has secured a deal with the company to help him pay a proposed California tax on billionaires, according to regulatory filings published this week.
Meta CEO Mark Zuckerberg has agreed to remain in California for eight years to avoid a proposed billionaire tax.
What's confirmed
- "dramatic and unprecedented transformation taking place in the tech industry and global economy related to artificial intelligence."
- Meta CEO Mark Zuckerberg reached an agreement with the company’s board to help him pay a proposed California billionaire tax without losing his controlling stake in the company, according to regulatory filings published this week.
- Zuckerberg is the sixth-richest person in the world with a net worth estimated at more than $220 billion, according to Forbes.
- Meta CEO Mark Zuckerberg listens as President Donald Trump speaks in the East Room of the White House in Washington, Tuesday Sept.
What's still developing
- California's nonpartisan Legislative Analyst's Office (LAO) said "some billionaires" may decide to leave the state in response to the tax, potentially reducing the income tax revenue they generate.
- "We created this new class of shares with the purpose of creating a publicly traded non-voting stock usable for capital raising, employee compensation, acquisitions, other general corporate purposes while preserving the voting power of existing Class A and B shareholders," Li said during Meta's third-quarter earnings call.
- The disclosures were made alongside Meta’s second-quarter earnings report, which revealed a 26% jump in annual revenue.
- The social media firm made the disclosures about Zuckerberg’s threats to offload his $110 million Palo Alto compound and establish residency outside the Golden State in a 109-page Securities and Exchange Commission filing posted Wednesday, which revealed for the first time the billionaire’s concerns about how the wealth tax could rip away his control of the firm he founded.
- The ballot proposal, which could be subject to lawsuits even if voters approve it, calls for a one-time 5 percent tax on stock and other assets held by billionaires in the state as of January 2026.
- Many wealthy individuals, including Zuckerberg, currently avoid significant tax payments by borrowing against their shares and taking low salaries—$1 annually in the Meta CEO’s case.
- Selling these shares could potentially help raise funds for Meta’s expensive investments in AI data centers, without diluting Zuckerberg’s existing voting control.
- Becerra has called Prop. 40 "sketchy" and argued the state needs a long-term solution to address health care funding challenges Opponents of Proposition 40 qualified Props 41 and 42 for the November ballot as countermeasures to the billionaire tax, potentially preventing it from taking effect even if it passes. "If passed, Prop 41 would nullify any new state taxes enacted after Jan. 1, 2026 that do not count toward California's spending cap."
- Newsom has said he supports a national billionaire tax but argues a California-only wealth tax would put the state at a competitive disadvantage because wealthy residents could move elsewhere to avoid it.
- Meta CEO Mark Zuckerberg enters the debate on AI regulation, arguing against slowing down development.
- He secured the deal with a special committee of Meta after "robust" and "at several points, contentious" negotiations, according to a Wednesday financial disclosure.
- The company alluded to problems the company experienced during the Covid-19 pandemic, when Zuckerberg began working outside of the office and mostly from his large compound in Kauai, Hawaii.