Mark Zuckerberg threatened to go away California over billionaire tax

The submitting famous that Zuckerberg advised Meta he was contemplating relocating due to Proposition 40, extra generally often called the California billionaire tax. Meta mentioned Zuckerberg raised issues to a particular committee throughout the firm that his potential relocation could possibly be a danger to the corporate as a result of it could “increase questions” about administration amongst workers. In response, Meta negotiated a brand new inventory take care of Zuckerberg to maintain him in California in case the tax passes. The firm added that it was vital to maintain Zuckerberg near its Menlo Park headquarters, noting challenges confronted throughout the COVID-19 pandemic.

“The Special Committee was aware concerning the difficulties the Company confronted throughout the COVID-19 pandemic when Mr. Zuckerberg couldn’t be bodily current with the Company’s administration group and didn’t need the Company to face comparable challenges going ahead,” the submitting notes.

California voters will resolve subsequent month on the billionaire tax, with polling exhibiting voters divided over the proposition. 

Zuckerberg famously solely takes a wage of $1 a yr from Meta, however that gained’t save him from the tax. Proposition 40 relies on an individual’s world web value, not their annual revenue. Meta mentioned Wednesday that if Proposition 40 passes, Zuckerberg would probably should promote or borrow in opposition to his personal shares within the firm to pay the brand new tax, in keeping with the submitting. Selling shares would dilute Zuckerberg’s voting management on the board, the place as chairman, he maintains 61%. 

According to the submitting, Zuckerberg “made clear that he doesn’t assist any financing, or different actions, that may lead to his lack of voting management.” Meta mentioned the corporate agreed to situation Zuckerberg extra shares to offer him some respiration room, noting that it “supplies him a supply of liquidity, with out lowering his voting curiosity.”

Billionaires fleeing the state has develop into the largest concern over Proposition 40, as California relies on progressive taxes on the rich to fund its authorities. Billionaires already pay the state billions of {dollars} by way of the state’s revenue tax, and if the extremely rich go away for good, they are going to take their tax {dollars} with them. Supporters of Proposition 40 say the priority is overblown and passing the tax is not going to lead to an exodus.

Even if Zuckerberg left the state, there’s no proof it could defend him from paying the tax. Proposition 40 is a one-time tax primarily based on January 2026 residency. That means even when he moved, he’d nonetheless be liable for paying the tax. And transferring wouldn’t defend him from future taxes beneath Proposition 40 as it should solely be assessed as soon as. 

Meta was not instantly obtainable for remark.

Contact tech reporter Matthew Brown at [email protected] or matthewbrownsfgate.11 on Signal.