California’s proposed wealth tax hasn’t even passed yet, and it’s already shaping a stock deal at one of the state’s biggest companies, complete with a promise from its founder not to leave.
In a filing with the Securities and Exchange Commission this week, Meta disclosed that Mark Zuckerberg told a board committee he was “evaluating relocating his primary residence outside California” because of Proposition 40, the billionaire tax on the Nov. 3 ballot. The filing says the measure could hit him with a “significant, multi-billion dollar tax payment.”
The deal
Meta’s board is issuing a new class of non-voting Class C shares. Under the agreement, Zuckerberg can sell up to 20% of the Class C shares he receives, “representing 10% of his overall economic stake,” for any reason, including paying a wealth-tax bill. The rest stay locked up and are released gradually over eight years.
In exchange, Zuckerberg committed to stay a resident of California, or wherever Meta keeps its headquarters, for eight years, barring “material unforeseen circumstances.”
Forbes puts Zuckerberg’s net worth at $224 billion, according to the Daily Caller. Earlier this year, he and his wife were reported to be buying a Miami mansion in the enclave known as the “Billionaire Bunker.”
What Prop 40 would do
According to California’s nonpartisan Legislative Analyst’s Office:
- It imposes a one-time 5% tax on the net worth of billionaires who were California residents on Jan. 1, 2026.
- The tax is due in 2027, and payments can be spread over five years at extra cost.
- Real estate, pensions and retirement accounts are generally excluded.
- Ninety percent of the money must go to public health care, and the state’s constitutional spending limits wouldn’t apply to it.
The LAO says the state “probably would collect tens of billions of dollars,” but warns billionaires may cut their state income tax bills, including by moving away.
Note that Jan. 1 residency date, set ten months before anyone votes. Critics, including a fellow at the Ayn Rand Institute, call it an unconstitutional retroactive law. Several billionaires, including Larry Page, Sergey Brin and Peter Thiel, were reported to have left before or around that deadline.
Even Newsom says no
Democratic Gov. Gavin Newsom opposes Prop 40. “I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending,” he said.
The other side
The union behind it, SEIU United Healthcare Workers West, projects about $100 billion in revenue and says the money would backfill cuts to health care, food assistance and education. Rep. Ro Khanna is among the Democrats backing it.
The bottom line
When a tax is so punishing that a company has to hand its founder an escape hatch in stock just to keep him in the state, the tax is the problem. And it doesn’t stop with billionaires. Every dollar of income tax that walks out the door to Florida is a dollar the rest of California has to make up.
And look at that residency date. The cutoff was fixed months before the people paying could vote on it or plan around it. That isn’t fairness. It’s a shakedown with a ballot number.
Wealth doesn’t have to stay in California. Jobs, headquarters and taxpayers can all move, and Prop 40 hands them one more reason to pack.