Mark Zuckerberg told Meta’s board of directors that he was considering leaving California because of a possible Proposition 40 tax bill, according to Meta’s filing with the Securities and Exchange Commission (SEC).
The chief executive’s estimated tax liability exceeds $11 billion from the proposed billionaires’ wealth tax on the Nov. 3, 2026, ballot, Forbes reported.
Proposition 40 would impose a one-time 5% assessment, payable in annual installments over five years, on any California resident worth at least $1 billion starting in January 2026, the legislative analyst’s office showed.
Supporters led by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) project could raise $100 billion. The initiative dedicates 90% of proceeds to health programs, Fortune reported.
Zuckerberg struck a deal with Meta’s board to create non-voting shares that cover his potential tax bill. The arrangement turned a routine corporate filing into a flashpoint for a campaign already altered by billionaire departures and record opposition spending.
Also read: JP Morgan signals growing storm over US wealth taxes
Meta’s New Class C Shares Give Zuckerberg a Financial Workaround
Zuckerberg currently controls approximately 60.6% of Meta’s total voting rights through his Class B shares with exceptional voting rights. Selling enough of those shares to cover the liability could have caused its voting stake to fall to 53%, a governance risk, the SEC filing says.
The workaround is a new class of non-voting Class C common stock distributed to all shareholders in the form of a dividend-structured stock split.
More from Mark Zuckerberg:
Zuckerberg can immediately sell up to 20% of the Class C shares he receives to cover any liability under Prop 40. This arrangement represents 10% of his overall economic interest in Meta without reducing his voting control.
In exchange for this financial cushion, Zuckerberg agreed to remain a California resident for eight full years, CBS News reported.
Zuckerberg “would effectively pay to serve as CEO of the company while residing in California,” the filing states bluntly.
Stanford economists’ Prop 40 plan could leave California $39 billion worse off
Researchers at Stanford University’s Hoover Institution estimate that the proposed tax would raise less than the $100 billion that supporters had hoped for.
Benjamin Jaros and Joshua Rauh project that the tax would raise about $30 billion, according to an article from the National Bureau of Economic Research (NBER).
The document places that estimate between $28 billion and $36 billion, depending on assumptions about how the state’s wealthiest residents leave the state.
Six billionaires publicly left California before the Jan. 1, 2026, residency deadline, removing $536 billion from the proposed tax base, the Hoover Institution reported.
Those exits included Google co-founders Larry Page and Sergey Brin, as well as Palantir co-founder Peter Thiel, wiping out nearly 30% of the taxable wealth base, Fortune reported.
After accounting for future tax losses resulting from these departures, Proposition 40 would leave California $38.9 billion worse off. In 100,000 simulations with different revenue assumptions, the NBER paper estimates that 85 percent of scenarios resulted in a net financial loss to the state.
In a series of NBER working papers, economists Emmanuel Saez and Gabriel Zucman say the departures would take 25 years to erode the projected windfall.
Stanford economists estimate that California’s proposed Prop 40 billionaire tax could make the state $39 billion worse off, despite projected revenue gains. JHVEPhoto / Getty Images
Billionaires and politicians divided as November 3 vote approaches
The fight over the wealth tax has divided California’s political establishment and its billionaire class, with hundreds of millions of dollars flowing into the campaign. Tech billionaires have committed more than $340 million to defeat Prop 40, with Google co-founder Brin contributing more than $100 million, Fortune reported.
California Gov. Gavin Newsom approved Proposition 42 on Oct. 9, a competing measure funded by Brin that would ban retroactive taxes on personal property, Cal Matters reported.
The California Democratic Party approved Proposition 40 despite the governor’s opposition, revealing a division within the state’s majority party over the tax, Bloomberg Tax reported.
A Berkeley-Politico poll found that support for Proposition 40 fell from 50% in February 2026 to 45%, while opposition rose from 28% to 43%, The Hill reported.
Nvidia CEO Jensen Huang took the opposite stance of the departing billionaires, telling Fortune that he had no plans to leave California because of the tax.
The fact that I can afford to pay $8 billion in taxes over five years is a privilege.
At an event at Stanford, Huang also urged leaders to move to California, calling the state’s talent pool irreplaceable.
What California voters should weigh before voting on November 3
The November 3 vote does not offer a simple yes or no choice on the wealth tax.
Propositions 41 and 42 are countermeasures designed to overturn Proposition 40 if either receives more yes votes than the wealth tax. Proposition 40 may be overturned if Proposition 41 or Proposition 42 receives more yes votes, a dynamic that Fortune says creates strategic complexity for wealth tax supporters.
The nonpartisan Legislative Analyst’s Office (LAO) projects that the tax would raise tens of billions in temporary revenue while reducing annual income tax revenue by less than $1 billion, a gap that underscores the tradeoff between a large, one-time windfall and a smaller but permanent drag on recurring state revenue, Fortune reported.
This trade-off is playing out in the context of a growing national wealth gap. The richest 1% of U.S. households held a record 32.5% share of total national net worth at the start of 2026, while the bottom half held just 2.3% during the same period, according to data from the Federal Reserve Bank of St. Louis.
Sen. Bernie Sanders and Rep. Ro Khanna, two of the measure’s most prominent supporters, both highlighted this divide in pushing voters to pass Proposition 40, NBC News reported.
The November 3 results will indicate whether a state can tax concentrated wealth on a large scale without accelerating the capital flight that erodes the revenue it set out to capture.
Related: Billionaire Ray Dalio Sees Dangerous Risk in U.S. Wealth Tax
This story was originally published by The street on October 26, 2026, where he first appeared in the Taxes section. Add TheStreet as Favorite source by clicking here.
