Mark Zuckerberg considers leaving California over billionaire tax. Then Meta makes a move

Mark Zuckerberg is considering leaving California over a proposed billionaire tax. Meta has responded with a stock deal that would give its CEO access to funds without sacrificing his voting control.

According to SFGATE, Zuckerberg told a special committee in an SEC filing that he was weighing a move because of Proposition 40, California’s proposed wealth tax on billionaires. He warned that his departure could “raise questions” about management among employees.

Meta wanted Zuckerberg to remain close to its Menlo Park headquarters. The special committee pointed to the difficulties the company faced during the COVID-19 pandemic when he could not be physically present with the management team, saying it wanted to avoid similar challenges in the future.

How Zuckerberg could pay the tax without losing control of Meta

Proposition 40 would tax global net worth rather than annual income, so Zuckerberg’s $1 annual salary from Meta would not exempt him. According to the filing, he would likely need to sell or borrow against his shares to pay the tax.

Selling shares would dilute his voting power. Zuckerberg maintains 61% as chairman. The filing says he made clear that he does not support any financing or other actions that would result in his loss of voting control. Meta’s answer was to issue him additional shares. The company said the move provides him a source of liquidity, without reducing his voting interest.

Reuters reports that the deal involves a new class of non-voting Class C shares. Zuckerberg can sell 20% of those shares immediately, equivalent to 10% of his overall economic stake, giving him a potential source of funds to cover the tax without reducing his voting control. Under the agreement, he also committed to maintaining residency in California, or wherever Meta is headquartered, for eight years. The company plans to issue the shares in January 2027.

The committee also described keeping Zuckerberg close to Meta as “critically important,” citing the “unprecedented challenge and competition” facing the company in AI. But the proposed tax has sparked a wider debate over whether California’s wealthiest residents will stay if it passes. Proposition 40 would impose a one-time 5% tax on billionaires, a measure that could affect some of the country’s richest people. California is home to as many as 250 billionaires, with a combined net worth exceeding $2 trillion. Forbes ranks Zuckerberg as the world’s sixth-richest person, with a net worth of around $240 billion.

Opponents of Proposition 40 warn that the tax could push wealthy residents out of California, costing the state income-tax revenue it currently collects from them. Gov. Gavin Newsom has also opposed the measure, while supporters dispute the likelihood of a billionaire exodus.

Moving out of California now might not spare Zuckerberg from the tax. Proposition 40 bases liability on residency in January 2026 and would be assessed only once, meaning a move now would not change whether he owes it if the measure passes.