Meta creates new shares to shield Zuckerberg from California wealth tax

Social media giant restructures stock to let CEO sell shares without losing control as state votes on billionaire tax

By LineZotpaper

Published22 October 2026

Read Time2 min

Sources4 outlets

Meta has struck a deal with Mark Zuckerberg to protect him from the potential cost of California's Proposition 40, a one-time 5% tax on billionaires. The company is creating a new class of non-voting shares through a stock split, allowing Zuckerberg to sell shares to cover a multibillion-dollar tax bill without diluting his voting control.

Meta revealed on Wednesday night that the arrangement would keep its chief executive living in California, where its headquarters are located. In exchange, Zuckerberg is committed to remain a resident of the state, or wherever Meta maintains its base, for eight years.

Zuckerberg, worth $239bn according to Forbes, told Meta he was considering moving his primary residence elsewhere because Proposition 40 could expose him to a massive tax liability, potentially forcing him to sell voting shares to pay it. In response, Meta is creating a new class of non-voting shares via a two-for-one stock split for all existing shareholders, which will allow Zuckerberg to sell some of the new class C shares to pay a potential tax bill while maintaining control.

California voters will decide on Proposition 40 early next month. Recent polling has shown that the measure remains short of majority support. Tech billionaires have been spending heavily to fight it, including Google co-founder Sergey Brin, Palantir co-founder Peter Thiel, and former Google CEO Eric Schmidt.

US Congressman Rohit Khanna, representing California's 17th congressional district, has dubbed Proposition 40 as a choice between standing with the working class or the oligarchs. "Every society is taxed. The only question is who will pay," Khanna wrote in the Guardian last week.

Meta also reported a 26% rise in revenues for the last quarter to $64.6bn, beating expectations of $63.3bn. Profits fell by 37% to $13bn, dragged down by a $9.9bn charge related to Meta's landmark lawsuit over child protection and social media addiction failings. In a separate case, a judge in New Mexico ordered Meta to pay $25bn after a trial found the company had misled the public about how it handled Facebook user data. Meta also revealed it had cut its headcount to 66,775 at the end of September, 15% fewer than a year ago.

Analysis

Why This Matters

The deal highlights how billionaires can use corporate structures to avoid wealth taxes, which may influence other states considering similar measures.
Proposition 40's outcome could set a precedent for taxing ultra-wealthy individuals at the state level, potentially reshaping California's fiscal landscape.
The arrangement ensures Zuckerberg retains voting control of Meta, preventing a forced sale that could shift power dynamics within the company.

Background

California's Proposition 40 proposes a one-time 5% tax on the roughly 250 billionaires residing in the state. It is among the most ambitious wealth tax initiatives in the US, targeting individuals with net worth exceeding $1bn. Similar proposals have been debated at the federal level but never enacted. Meta, headquartered in Menlo Park, California, is one of the world's most valuable companies, and Zuckerberg holds a controlling stake through supervoting shares. The new class C non-voting shares are designed to allow him to sell equity without diluting his control, a tactic other tech founders have used before.

Key Perspectives

Mark Zuckerberg and Meta: The arrangement protects Zuckerberg from a potential forced sale of voting shares, preserving his control of the company. Meta argues it is a reasonable corporate response to a specific tax threat that could destabilize its leadership.

Supporters of Proposition 40 (e.g., Rep. Rohit Khanna): They see the measure as a fairness issue, arguing that billionaires should pay more in taxes while working families struggle. Khanna frames it as a choice between oligarchy and democracy.

Opponents (tech billionaires and business groups): They argue the tax would drive wealthy individuals and businesses out of California, harming the state's economy and tax base. They have spent heavily to defeat the measure.

What to Watch

The result of the Proposition 40 vote in November; recent polls show it lacking majority support.
Whether other states or the federal government propose similar wealth taxes in response to California's initiative.
The financial impact on Meta's stock price and Zuckerberg's net worth if the proposition passes and he sells shares to pay the tax.

Sources

Meta creates a new stock class to keep Zuckerberg in control · All Content from Business Insider
Meta strikes deal with Zuckerberg to protect him from California wealth tax · Business | The Guardian
Meta strikes deal with Zuckerberg to protect him from California wealth tax · World news | The Guardian
Zuckerberg told Meta directors he might leave California, where he could lose billions to a wealth tax. Meta answered with a new class of stock · Fortune | FORTUNE

Checked

12 claims in this story checked against 1 source: 12 supported.

Show each claim

SupportedMeta is creating new shares to shield Zuckerberg from California’s wealth tax.Business | The Guardian: “Meta has struck a deal with Mark Zuckerberg to protect him from the threat of a California wealth tax targeting billionaires.”
SupportedThe new stock structure lets Zuckerberg sell shares without diluting his voting control.Business | The Guardian: “This will allow Zuckerberg to sell some of this new class C shares to pay a potential tax bill, without diluting his control of the company.”
SupportedProposition 40 is a one-time 5% tax on billionaires living in California.Business | The Guardian: “Californians will vote early next month on Proposition 40 – a one-time 5% tax on the roughly 250 billionaires who live in the state.”
SupportedMeta is creating non-voting shares through a two-for-one stock split for existing shareholders.Business | The Guardian: “In response, Meta is creating a new class of non-voting shares via a two-for-one stock split for all existing shareholders.”
SupportedThe arrangement would keep Zuckerberg living in California, or wherever Meta is based, for eight years.Business | The Guardian: “Under the deal, Zuckerberg will receive new shares that could be sold to potentially foot a multibillion-dollar tax bill in the event that California passes a one-off billionaire tax. In return, he is committed to remain a resident of the state, or wherever Meta maintains its base, for eight years”
SupportedZuckerberg told Meta he was considering moving his primary residence because the tax could expose him to a large liability.Business | The Guardian: “Zuckerberg, worth $239bn according to Forbes, told Meta he was considering moving his primary residence elsewhere because Prop 40 could expose him to a massive tax liability, potentially forcing him to sell voting shares to pay it.”
SupportedCalifornia voters will decide on Proposition 40 early next month.Business | The Guardian: “Californians will vote early next month on Proposition 40 – a one-time 5% tax on the roughly 250 billionaires who live in the state.”
SupportedRecent polling showed the measure short of majority support.Business | The Guardian: “Recent polling has shown that Prop 40 remains short of majority support with voters.”
SupportedKhanna wrote, “Every society is taxed. The only question is who will pay.”Business | The Guardian: ““Every society is taxed. The only question is who will pay. In Trump’s America, working people pay more than they should, while billionaires are so unburdened that they are becoming trillionaires.”
SupportedMeta’s revenue rose 26% to $64.6bn, exceeding expectations of $63.3bn.Business | The Guardian: “Meta also reported a 26% rise in revenues for the last quarter to $64.6bn, beating expectations of $63.3bn.”
SupportedMeta’s profits fell 37% to $13bn, with a $9.9bn charge related to its lawsuit over child protection and social media addiction failings.Business | The Guardian: “But profits fell by 37% to $13bn, dragged down by a $9.9bn charge related to Meta’s landmark lawsuit over child protection and social media addiction failings.”
SupportedA New Mexico judge ordered Meta to pay $25bn after a trial found it had misled the public about its handling of Facebook user data.Business | The Guardian: “In a separate case, a judge in New Mexico ordered Meta to pay $25bn on ⁠Wednesday after a trial found the company had misled the public about how it handled Facebook user data.”

Discussion elsewhere

Hacker News8 points · 3 comments →

California is the big loser here (as expected).
RaffaelKuhn on Hacker News