An eight-year pact
Mark Zuckerberg told Meta's board he was considering selling his Palo Alto home and establishing residency in a state with no personal income tax — such as Texas or Florida — in response to Proposition 40, a ballot measure set for California voters on November 3. Drafted by UC Berkeley tax law professors and sponsored by SEIU United Healthcare Workers West, the proposal imposes a one-time 5% wealth tax on state residents with net worth exceeding $1 billion. For Zuckerberg, whose fortune is estimated at roughly $220 to $240 billion, the tax bill could exceed $11 billion.
Instead of relocating, Zuckerberg negotiated an arrangement binding him to stay in California — or wherever Meta's principal headquarters is located — for eight years, absent "material unforeseen circumstances" that would make relocation prudent. In return, he receives a new class of non-voting shares, designated Class C, which he can sell or transfer to cover potential tax liability.
The share structure
Meta will announce in January 2027 a one-for-one stock dividend: each shareholder receives one Class C share for every Class A or Class B share held. The practical result resembles a 2:1 stock split, but with a critical distinction — half of the new shares carry no voting rights.
Zuckerberg controls approximately 60.6% of Meta's voting power through his Class B super-voting shares (each carrying 10 votes). Economically, however, he owns roughly 13% of the company's value. If forced to sell Class B shares to pay the tax, his voting stake would drop to approximately 53% — still majority, but significantly diminished.
Under the new arrangement, Zuckerberg may immediately sell or transfer up to 20% of the Class C shares he receives — representing 10% of his total economic stake — for "any reason, including to pay his potential tax liability under California Proposition 40," without affecting his voting control.
The remaining 80% of Class C shares vest gradually at 2.5% per quarter over eight years, and only while he remains in a full-time leadership role at the company.
Why this matters
The maneuver raises questions far beyond a single billionaire and a single state. First, Proposition 40 represents an unprecedented innovation in American taxation: a wealth tax at the state level, not the federal level. If approved, it creates a precedent that other states could replicate. Washington is already debating similar measures, and discussions in New York and New Jersey are not ruled out. If multiple states impose their own billionaire taxes, the combined effect could be even more burdensome.
Second, the deal reveals how concentrated voting power in a single person enables maneuvers impossible under traditional governance structures. Meta could have simply diluted Zuckerberg's control by selling Class B shares — but that would undermine what the company considers its greatest asset: the founder's ability to maintain a long-term vision for artificial intelligence. As the special committee stated, it was "crucial" that he remain "in close coordination" with management and "in close proximity" to Meta Superintelligence Labs.
Third, the arrangement demonstrates a playbook other billionaires may replicate. Google co-founder Sergey Brin spent hundreds of millions of dollars on an aggressive campaign against Proposition 40 and has already relocated to a different state. PayPal co-founder Peter Thiel, an outspoken opponent of the tax, also resides outside California. But Zuckerberg is the first to negotiate a structural solution with his board — turning the very instrument he used to entrench his control for decades into a fiscal escape valve.
Meanwhile, the tax itself carries irony: 90% of the revenue would fund healthcare programs, with the remaining 10% going to education and food assistance. The money that would be collected from Zuckerberg — a CEO who has earned $1 per year since 2013 — would finance the public services that sustain the technology ecosystem he built.
What remains is to consider whether Proposition 40, whether passed or rejected, has not already fulfilled its true purpose by forcing a fundamental reassessment of how extreme wealth — and the political power it buys — is taxed in the United States.
Sources: Los Angeles Times, Fortune, TechCrunch
✓ Independent sources cross-checked and verified before publishing
