Mark Zuckerberg threatened leave California over tax plan
Meta CEO Mark Zuckerberg told the company’s board he was considering leaving California over a proposed wealth tax, according to a regulatory filing. Meta has…
Meta CEO Mark Zuckerberg threatened leave California over a proposed wealth tax, and the company has structured a new class of shares around his continued residence and voting control. A regulatory filing says Zuckerberg agreed to remain in California, or wherever Meta is headquartered, for eight years.
The arrangement could let Zuckerberg sell shares to cover a potential tax bill without giving up his voting power. Meta announced the new nonvoting stock on Wednesday as it released third-quarter results, according to reporting by Fortune and WIRED.
Shares tied to staying in California
The proposed measure, known as Proposition 40, would impose a one-time 5 percent tax on stock and other assets held by billionaires in California as of January 2026. Voters are due to decide on it on Nov. 3, according to Fortune and WIRED.
WIRED reported that Zuckerberg told Meta board members during a dinner on September 9 that he was considering leaving the state. He also said he planned to list his Palo Alto home for sale four days later, the company filing said.
Within days, Zuckerberg and a special committee of Meta’s board reached an agreement linking the sale of new shares to his residence. The company’s filing said the committee wanted him to continue leading Meta from California and remain close to Meta Superintelligence Labs.
Meta will distribute the new Class C shares to all shareholders in proportion to their existing holdings. The shares carry no votes. Under the agreement, Zuckerberg can sell 20 percent of his allocation to help pay any taxes he owes; the remaining 80 percent can be sold in portions over the next eight years as long as he stays where Meta is headquartered, WIRED reported.
That distinction matters for Meta’s governance. Zuckerberg’s existing Class B shares carry 10 votes per share, while Class A shares trade on Nasdaq with one vote per share, Fortune reported. The new stock is designed to give Meta another way to fund employee compensation, acquisitions and capital needs without diluting Zuckerberg’s voting control.
Meta wants capital for AI investment
The proposal arrives as Meta faces substantial spending needs. Fortune reported that the company’s capital expenditures reached $34.9 billion in the third quarter, while free cash flow fell to negative $2.1 billion. Meta forecast capital expenditures of $135 billion to $140 billion for 2026.
Meta’s filing also described the tax risk as a potential “significant, multi-billion dollar tax payment,” according to reporting by Yahoo Finance. The company said Zuckerberg could sell up to half of his economic stake through the new shares without relinquishing voting control.
The board’s concern was not limited to the tax bill. WIRED reported that its special committee considered the operational difficulties Meta faced during the COVID-19 pandemic, when Zuckerberg could not be physically present with the management team. The filing said the committee did not want the company to face similar challenges again.
For Meta, the deal connects a personal tax decision to the company’s leadership and financing structure. It gives Zuckerberg a way to sell some shares while preserving his control, and gives the company a potential source of capital as it funds AI infrastructure. The arrangement also allows a possible change of location: WIRED reported that the agreement requires Zuckerberg to live wherever Meta keeps its headquarters.
Meta’s third-quarter revenue rose 26% to $64.6 billion, Fortune reported. The company also forecast fourth-quarter revenue of $73 billion to $76 billion.
“The goal is to keep Zuckerberg continuing to lead the company from California and in close proximity to Meta Superintelligence Labs,” the filing stated, according to WIRED.
Source: fortune.com
