Meta struck a deal with Mark Zuckerberg to protect him from the threat of a California wealth tax targeting billionaires.
The social media company behind Facebook, Instagram and WhatsApp revealed Wednesday evening that the deal would keep its chief executive in California, where its headquarters are located.
As part of the deal, Zuckerberg will receive new shares that could be sold to potentially pay a multibillion-dollar tax bill in the event California passes a one-time tax on billionaires. In exchange, he agrees to remain a resident of the state, or wherever Meta maintains his base, for eight years.
Californians will vote early next month on Proposition 40 – a one-time 5% tax on the approximately 250 billionaires who live in the state.
Zuckerberg, worth $239 billion according to Forbes, told Meta that he is considering moving his primary residence elsewhere because Prop 40 could expose him to a huge tax debt, potentially forcing him to sell voting stock to pay for it.
In response, Meta is creating a new class of non-voting shares via a two-for-one stock split for all existing shareholders.
This will allow Zuckerberg to sell some of these new Class C shares to pay a possible tax bill, without diluting his control over the company.
A recent poll showed that Proposition 40 remains short of majority voter support. Tech billionaires have spent heavily to fight the measure, including Google co-founder Sergey Brin, Palantir co-founder Peter Thiel and former Google CEO Eric Schmidt.
Rohit Khanna, a U.S. congressman representing California’s 17th congressional district, called Prop 40 a choice between standing with the working class or the oligarchs.
“Every corporation is taxed. The only question is who will pay. In Trump’s America, workers pay more than they should, while billionaires are so relieved they become trillions. In the America we seek, billionaires and billionaires will pay their fair share, while workers will not be overcharged,” Khanna wrote in the Guardian last week.
Meta also reported a 26% rise in revenue for the latest quarter, to $64.6 billion, beating expectations of $63.3 billion.
But profits fell 37 percent, to $13 billion, dragged down by a $9.9 billion charge related to Meta’s landmark lawsuit over child welfare and social media addiction failures.
In a separate case, a New Mexico judge on Wednesday ordered Meta to pay $25 billion after a lawsuit found the company misled the public about how it handled Facebook user data.
Meta also revealed that it had reduced its workforce to 66,775 people at the end of September, 15% fewer than a year ago.
Reuters contributed to this report.
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