10%: Meta’s New Strategy to Let Zuckerberg Pay California’s $11B Tax Bill

Meta Platforms has unveiled a novel financial structure designed to allow CEO Mark Zuckerberg to potentially fund his share of California’s proposed billionaire tax while retaining absolute control over the company. The tech giant announced Wednesday that its board approved Class C common stock, a new category of nonvoting shares that takes effect in January. While the company stated the primary goal is to facilitate capital raising, employee compensation, and acquisitions for its AI initiatives, reporting from The New York Times suggests the move is a calculated response to Proposition 40, a one-time 5% wealth tax currently on the ballot in California.

The new share class functions as a one-time stock dividend, granting existing shareholders one Class C share for every Class A or Class B share they hold. This effectively results in a two-for-one stock split that does not alter the voting power of any shareholder. According to a recent SEC filing, this structure allows Zuckerberg to sell or transfer up to 20% of the newly issued Class C shares he receives. Because the dividend is distributed on a one-to-one basis, selling that capped portion equates to 10% of his total economic stake in the company. The filing explicitly notes that this sale can be executed to pay potential tax liabilities under Proposition 40 without affecting his majority voting control.

Zuckerberg, who currently controls approximately 60% of the vote at Meta, has been actively discussing this strategy with board members since July. The SEC filing documents that the billionaire tax was a recurring topic in meetings and communications throughout July and August. In September, Zuckerberg reportedly urged the board to finalize a plan to protect him from the tax. He warned that if an agreement could not be reached, he would list his Palo Alto property for sale, a move that could have triggered significant media scrutiny. The creation of the Class C shares followed shortly after these discussions.

Proposition 40, drafted by tax law professors at Berkeley and sponsored by the SEIU United Healthcare Workers West, targets hundreds of California-based billionaires. Backers estimate the measure could generate up to $100 billion over five years, with the majority of funds directed toward state healthcare needs, while the remainder supports food assistance and education. Estimates suggest Zuckerberg’s personal liability under the tax could reach as high as $11 billion.

The proposal has sparked intense debate among Silicon Valley leaders. Google co-founder Sergey Brin has aggressively campaigned against the measure, spending significant funds to defeat it. Critics argue the tax constitutes economic suicide for the state and may drive capital flight. However, Meta’s new policy suggests that major tech companies and their leaders are developing creative mechanisms to remain in the state while managing their financial obligations. Meta’s earnings release emphasized that keeping Zuckerberg in California is crucial for his close coordination with management and Meta Superintelligence Labs.

The reaction from proponents of the tax has been positive. Democratic U.S. Representative Ro Khanna, a vocal supporter of the measure, took to social media to comment on the news. He noted that it appears billionaires are preparing to stay and find ways to pay the tax. Khanna added that if Proposition 40 passes, the revenue will ensure that children in California have access to healthcare.