Zuckerberg Threatened to Leave California Over a Billionaire Tax, So Meta Built Him a New Class of Stock

Mark Zuckerberg told Meta's board he was ready to sell his Palo Alto home and leave California over a proposed billionaire tax. The board's answer was to invent a new class of stock so he could stay.

Meta laid out the story in a 109-page SEC filing on Wednesday, released alongside its third-quarter results. At a dinner with board members on September 9, Zuckerberg said he planned to list his Palo Alto home for sale four days later, according to Wired. The NY Post puts that compound at $110 million.

The tax that started it

The trigger is Proposition 40, on California's ballot November 3. It would impose a one-time 5% tax on stock and other assets held by billionaires living in the state as of January 2026. Backed by SEIU-United Healthcare Workers West to offset federal health care funding cuts, it polls slightly short of a majority, with one poll this week at 46% for and 43% against. Wired notes about $129 million has been spent campaigning against it.

The filing shows Zuckerberg raising the measure repeatedly in July with lead independent director Robert Kimmitt, saying it would "impact his ability to remain resident in California and pay any tax assessed on him if it becomes law." His attorneys followed up with a letter on August 3 asking a board special committee for a new arrangement to boost his liquidity. He would need to start moving by mid-September, the filing says, to establish residency elsewhere by mid-October.

His argument was about control as much as money. He noted he has taken only a $1 annual salary since 2013, and that paying the tax by selling Class B stock "could be large enough to reduce his voting interest in the Company to approximately 53%," the NY Post reports. He owns about 13% of Meta, including those super-voting shares. The Post estimates a 5% tax on a fortune of roughly $250 billion could mean a bill of about $12.5 billion.

The Founder Alignment Agreement

The special committee, which included Kimmitt, venture capitalist Charlie Songhurst and DoorDash CEO Tony Xu, said it remembered how hard the COVID-19 pandemic was when Zuckerberg could not be physically present with management. "The goal is to keep Zuckerberg continuing to lead the company from California and in close proximity to Meta Superintelligence Labs," the filing says.

The deal, finalized about a week before the disclosure, creates a new class of nonvoting Class C shares, handed to every existing shareholder in proportion to their holdings. Zuckerberg can sell 20% of his new shares to help pay any tax. The other 80% unlock in chunks over eight years as long as he stays in California or wherever Meta has its headquarters, "absent material unforeseen circumstances." Selling early would mean offloading some voting shares.

That headquarters clause matters. In theory, he and Meta could move together.

Business Insider says the shares give him $20 billion in "immediate liquidity" to cover the tax without losing control, and do not add to his net worth or ownership percentage. A person familiar with the matter told the outlet the whole class is worth $150 billion and is also meant to raise capital, pay employees and support the stock price. Wired adds that selling these shares could help fund Meta's AI data center spending without diluting his voting control. Meta declined to comment to Business Insider.

The billionaire backlash

Zuckerberg is not alone. Sergey Brin moved his residency to Nevada and has spent nine figures fighting the tax, while Eric Schmidt and Chris Larsen gave eight-figure sums. Brin-backed Propositions 41 and 42 would put up barriers to the wealth tax if they get more votes. Zuckerberg also reportedly bought a home in Florida in February.

It has already been a costly week for Meta in New Mexico, where a judge hit it with a $25 billion penalty in New Mexico. In California, the threat of one tax has already rewritten the share structure of one of the world's biggest companies, before a single vote is counted.

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