Meta Platforms has reached an agreement with Mark Zuckerberg, according to a report by Reuters. This decision was influenced by a California ballot initiative related to the Nov. 3 midterm elections, which has ignited intense discussions and substantial campaign expenditures.
As part of the arrangement, Zuckerberg will receive non-voting shares that he can sell to help cover a potential multi-billion-dollar tax obligation if the proposal is approved. In return, he has committed to residing in California or at Meta’s headquarters for a duration of eight years, as stated by Meta on Wednesday.
Zuckerberg, recognized as the sixth richest individual globally by Forbes, informed Meta of his thoughts about relocating his primary home outside California due to Proposition 40, referred to as the “California wealth tax.” This measure could expose him to significant tax liabilities, possibly compelling him to sell voting shares to manage the payment.
Proposition 40 seeks to ask Californians if they support a one-time 5 percent tax on the state’s billionaires, requiring over 50 percent approval for it to pass. California is home to approximately 250 billionaires with a combined net worth exceeding $2 trillion.
The funds generated from this tax would primarily benefit state healthcare programs, alongside contributions to state food assistance initiatives and public education.
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Meta, the parent company of Facebook and Instagram, emphasized the necessity for Zuckerberg to continue leading the company from its Menlo Park headquarters amid “extraordinary challenges and competition within our sector.” The company stated that it requires “hundreds of billions of dollars” over several years to fund its AI-focused growth strategy.
In January 2027, Meta plans to introduce a new class of non-voting Class C common stock. Zuckerberg, whose net worth is approximately $240 billion, will be able to sell 20 percent of the Class C shares he receives right away, which represents 10 percent of his total economic stake in the company. This will enable him to settle a potential tax obligation from Prop 40 without relinquishing voting control.
Brin compares tax to Soviet-style oppression
Proponents claim that California’s measure could generate $100 billion for healthcare, food assistance, and education. However, critics estimate the potential revenue at around $40 billion and warn that it might drive some billionaires out of the state, leading to a loss of future tax income and investment for California.
Google co-founder Sergey Brin has invested over $100 million to oppose the ballot initiative.
“I escaped socialism with my family in 1979 and witnessed the oppressive society it created in the Soviet Union. I do not want California to face a similar fate,” Brin recently remarked to the New York Times.
Sergey Brin, co-founder of Google, is seen on Oct. 8 during an event at the U.S. Institute of Peace in Washington, D.C. Brin has spent millions to oppose California’s Proposition 40 ballot measure. (Julia Demaree Nikhinson/The Associated Press)
Darien Shanske, a law professor at the University of California-Davis and co-drafter of the proposal, informed CNBC that moving wouldn’t mitigate the tax liabilities for the ultra-wealthy. Any billionaire residing in California on January 1 would still be subject to taxation under the state’s laws, he explained.
Support for Prop 40 includes notable figures such as California Democrat Ro Khanna in the House of Representatives and independent Senator Bernie Sanders of Vermont.
“Are we destined to live in a society dominated by oligarchs, begging for scraps while our economic and political realities are controlled by a select few of the wealthiest individuals?” Sanders questioned at a California rally earlier this month.
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Uncertainty surrounds the measure’s passage
The proposal has not created a clear divide of progressives and Democrats in favor versus billionaires against.
For instance, Jensen Huang, CEO and co-founder of Nvidia, has dismissed the initiative.
“The ability to pay $8 billion in taxes over five years is a privilege,” Huang stated to CBS News earlier this week. “I see it as a privilege and a responsibility. Nothing would bring me greater joy than to pay even more taxes.”
Democratic gubernatorial candidate Xavier Becerra, seen at a Los Angeles campaign stop on Oct. 15, doesn’t believe Proposition 40 is an adequate way to fund state services. (Mike Blake/Reuters)
Meanwhile, outgoing Democratic Governor Gavin Newsom opposes Prop 40 and supports Proposition 42, which seeks to amend the state constitution to prevent such tax initiatives after Jan. 1, 2026.
Newsom’s stance received criticism from actor Mark Ruffalo, who expressed it was “beyond sad” on social media. Addressing Newsom directly, Ruffalo stated that Democrats require a leader who is “firm when confronting the real disparities people face daily: billionaires versus the public and the planet.”
However, current Democratic gubernatorial candidate Xavier Becerra and the California Teachers Association (CTA) also oppose the measure, arguing that although it is well-intentioned, it presents a complex and unsustainable funding solution. The CTA is advocating for Proposition 3, which proposes raising funds through an income tax increase on high earners.
Becerra’s Republican challenger, Steve Hilton, firmly opposes Prop 40.
Historically, California voters have only greenlit one out of three citizen initiatives. Political analysts indicate that state ballot measures typically require strong early backing, as undecided voters tend to lean towards a No vote when the time comes.
“California ballot measures often see a decline in support over time, and if polling is below 50 percent in August, it does not bode well for its chances,” remarked John Pitney, a politics professor at Claremont McKenna College, in a report published by Reuters on Sept. 30.
A recent Citrin-Politico poll revealed that, among those expressing a view, 46 percent supported Prop 40 while 43 percent opposed it.
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