Zuckerberg Prepares for Proposed 5% Billionaires’ Tax: Reaches Agreement with Meta

Mark Zuckerberg, the founder of Meta, has reached an agreement with the company’s board of directors to help pay a proposed wealth tax on billionaires in California. The agreement will allow him to maintain control of the company while selling part of his holdings in a new class of shares to meet his tax obligations.

According to the Associated Press (AP), the agreement was disclosed in regulatory filings released by the company.

The tax could cost Zuckerberg more than $11 billion. If approved by voters in a November 3 election, the proposed legislation would impose a one-time 5% wealth tax on individuals with a net worth exceeding $1 billion.

According to Forbes estimates, Zuckerberg, one of the world’s wealthiest people, has a net worth of more than $220 billion. The proposed tax could leave him with a liability exceeding $11 billion.

Under the agreement with Meta’s board, Zuckerberg will remain the company’s largest shareholder and retain control. He will also be allowed to sell part of a new class of shares without voting rights. The move could help him meet various financial obligations, including the proposed wealth tax.

Zuckerberg Commits to Staying in California

According to the filings, Zuckerberg told the board last month that he was considering selling his home in Palo Alto in response to the proposed tax. However, he subsequently reached an agreement with the company.

Under the agreement, Zuckerberg has committed to remaining in California for the next eight years unless unforeseen significant circumstances arise that make staying impractical or inadvisable.

California is estimated to be home to several hundred billionaires. The proposed tax would apply to individuals whose primary residence was in the state on January 1, 2026, provided they meet the specified wealth threshold.

Tax Revenue Could Fund Healthcare and Education Supporters of the proposal say the revenue would primarily be used to offset cuts in federal healthcare funding. Ten percent of the proceeds would be allocated to education and food assistance programs.

The SEIU United Healthcare Workers West labor union and Vermont Senator Bernie Sanders are among those backing the initiative.

Susan Jimenez, the union’s chief of staff, described Zuckerberg’s agreement as a response to claims that billionaires would leave California.

However, opponents, including California Governor Gavin Newsom, warn that the tax could prompt wealthy residents to leave the state, potentially reducing future budget revenues. California relies heavily on high-income individuals for a Other Tech Billionaires Take a Different Approach

Unlike Zuckerberg, some technology entrepreneurs, including Google co-founders Sergey Brin and Larry Page, are seeking to reduce their ties to California and oppose the proposed tax.

Building a Better California, a political action committee opposing the tax, has raised more than $333 million. Sergey Brin reportedly contributed approximately 30% of that amount.

By comparison, the “Yes on 40” campaign supporting the tax has raised $32.7 million.

Meta Also Aims to Expand Investment Through the New Share Class Meta’s filings indicate that the new class of shares is not solely intended to help Zuckerberg address potential tax obligations. The move could also expand the company’s ability to finance investments in artificial intelligence infrastructure.

The new shares may also be used for employee compensation and acquisitions.

Zuckerberg has received an annual salary of $1 as Meta’s chief executive since 2013. According to the company, he will not receive additional compensation. Meta stated that if the proposed tax takes effect, Zuckerberg could effectively have to pay to serve as the company’s chief executive while living in California.

Meta Chief Financial Officer Susan Li said the new share class would broaden the company’s financing options and provide greater flexibility to invest amid unprecedented momentum driven by artificial intelligence across its business.

The proposed wealth tax in California continues to fuel debate, with potential implications for the financial decisions of the world’s wealthiest individuals and the future investment strategies of technology companies.