Should we send Mark Zuckerberg a t-shirt that says “I Got My Raise From the California Billionaire Tax”?
I’m on record opposing this proposed wealth tax, not because I hesitate to exproporiate oligarchic fortunes, but rather because past attempts to create big wealth taxes in countries more progressive than ours haven’t been very successful. Before resorting to a wealth tax in the United States, I’d like to try getting more creative about taxing capital gains, corporate profits, and the loans rich people take out in lieu of income.
It never occurred to me to oppose the billionaire tax on the grounds that it might increase billionaire compensation. But in Zuckerberg’s case that’s what happened this week. California’s Proposition 40 would impose a one-time levy of five percent on financial assets of $1 billion or more in order to restore cuts to state health care programs mandated last year by President Donald Trump’s Big, Beautiful Bill. The possibility that this ballot measure might pass prompted Facebook’s founder to threaten to move his principal residence out of California, where he owns homes in Palo Alto ($110 million) and Lake Tahoe ($60 million). To dissuade him from doing so, the board of the company known since 2021 as Meta showered Zuck with stock.
This is, among other things, a case study in how you can use existing wealth to extract additional wealth. Zuckerberg owns three pieds-à-terre in jurisdictions outside California, none of which would impose much hardship if he decided to move his family there full-time. They’re all three heated year-round!
In Washington, D.C., Zuck paid $23 million in 2025 for what the journalist Marc Fisher called “a garish red-brick monstrosity” in Woodland Normanstone. At the time of the sale, $23 million was the third-highest price ever paid for a residence in the nation’s capital. Woodland Normanstone is a swanky neighborhood with which I was unfamiliar until a decade ago (I’ve lived here 45 years) when multimillionaire Trump Cabinet members started moving in (Wilbur Ross, Steve Mnuchin).
In Florida, Zuck earlier this year paid the highest price in Miami-Dade County history ($170 million) to purchase an estate on Indian Creek Island, Miami’s new “Billionaire Bunker.”
Meanwhile, Zuck keeps building onto a $300 million Bond-villain compound he purchased on Kauai (in Hawaii) a decade ago. Zuck’s Kauai getaway is probably the most expensive property in the 50th state (unless you count Larry Ellison’s Lānaʻi, a latter-day Island of Doctor Moreau of which Ellison owns 98 percent).
Look on my works, ye mighty, and despair!
Meta’s board did not want Zuckerberg to remove to his fortresses in Woodland Normanstone, or Indian Creek. or Kauai. It wanted him to keep living three miles up the road from Meta’s headquarters in Menlo Park, California. A special committee the board set up to ponder the situation “was mindful,” according to a company filing with the Securities and Exchange Commission, “about the difficulties the Company faced during the COVID-19 pandemic when Mr. Zuckerberg could not be physically present with the Company’s management team and did not want the Company to face similar challenges going forward.” During this period Zuckerberg spent much of his time on Kauai.
The filing didn’t specify what Meta’s difficulties were while Zuck was dancing the hula on Kauai, but I think I can guess. The pandemic year of 2020 was when Zuckerberg started trying to will into existence a virtual-reality metaverse, a failed reconception of the company that’s drained $85 billion from its coffers. The metaverse is just the sort of stupid idea that a guy would come up with if he spent too much time playing on his computer in isolation from other people. Perhaps, the filing suggests obliquely, if Zuck had been closer to hand, management could have thrown a little cold water in his face and talked him out of this terrible idea.
On the other hand, given the fiasco Meta’s metaverse turned out to be—and given that Meta this week reported its first quarter since 2012 of negative “free cash flow” (that is, cash flow minus operating expenses and capital expenditures)—a more logical move for the board might have been to bid Zuck adieu and wish him the best of luck in his next endeavor.
But absent some grave ethical breach, Meta was stuck with Zuck, because Zuck controlled a majority of Meta’s voting stock. Until this week, Meta had a dual-class stock structure, with a Class A share worth one vote and a Class B share worth 10 votes. Zuckerberg owned only about 13 percent of the company, but because he possessed nearly three times as many Class B shares as Class A shares, he controlled 61 percent of all voting shares.
How would the California 5 percent wealth tax affect Zuckerberg? Well, his net worth, according to Forbes, is $224 billion, and 5 percent of that is about $11 billion. To pay the Golden State his $11 billion tax bill, Zuckerberg was looking at selling some of his voting stock, and he really didn’t want to do that. He didn’t want to do that even though, after the sale, Zuckerberg would still possess a 53 percent majority of Meta’s voting stock. This is an important point to remember: The California billionaire wealth tax never threatened Zuckerberg’s control of Meta. It merely threatened to reduce Zuckerberg’s 61 majority to a 53 percent majority. But Zuck was a petulant child. He wanted to keep the whole 61 percent. So, Meta gave Zuckerberg a raise.
A raise for someone like Mark Zuckerberg isn’t the same as a raise for you and me. When you’re worth $224 billion, you don’t ask for a bigger weekly paycheck. Indeed, Zuckerberg doesn’t receive a paycheck at all; he’s a dollar-a-year man. Yes, in America you can own five houses worth well over half a billion dollars on a salary of $1 per year. Exactly how is a riddle I’ll explain some other day. The salient point is that when you’re as rich as Zuckerberg, you don’t care about your income; income is an unwelcome date with the Internal Revenue Service. You care about your stock. More stock is always better. So, Meta doubled Zuck’s stock.
The stock that Meta gave Zuck didn’t increase the monetary value of his holdings. It wasn’t that kind of raise. It did, however, improve Zuck’s liquidity, freeing him to pay the California wealth tax without diminishing his control over Meta; under the agreement, Zuckerberg can immediately cash out 20 percent of the new shares. If Proposition 40 doesn’t pass, or if it gets thrown out in court, Zuckerberg can use that 20 percent to buy whatever he wants; the deal isn’t contingent on Proposition 40’s enactment. Either way, Zuckerberg will increase his disposable income. I call that a raise.
The stock grant solidifies Zuckerberg’s power over Meta. It doesn’t, strictly speaking, increase the dollar value of Zuckerberg’s shares, but when you’ve got $224 billion in the bank the currency that really matters isn’t money so much as power. The craving, after accumulating great wealth, to accumulate power explains how America over the past half-century evolved into an oligarchy (see my piece “How the Billionaires Took Over,” June 2025). Zuckerberg isn’t, so far as I can tell, after political power so much as economic power, and this deal with Meta’s board grants him that. “It is an unprecedented move to protect a single person,” Andrew Behar, chief executive of the nonprofit shareholder’s rights group As You Sow e-mailed me, “especially one who just racked up a $25bn settlement with New Mexico, a $17bn settlement for a defective product, and with over 1,000 pending lawsuits that could easily be $100 million each.”
Here’s what Meta did to keep Zuckerberg in Palo Alto. It took its dual-class structure and turned it into a triple-class structure by creating, as a dividend, a Class C stock that has no voting rights at all. For every Class A or Class B share that Zuckerberg or any other Meta shareholder possesses, Meta awarded a Class C share. It’s an increase in stock shares, but not an increase in their monetary value because creation of non-voting Class C stock dilutes proportionally the value of existing Class A or Class B stock. The board used the Class C dividend, Matt Moscardi, co-founder of the shareholder research group Free Float, told me via email, “to use the market and minority shareholder capital to pay for Mark Zuckerberg’s millionaire tax.”
For most shareholders, this award of Class C stock will reduce the monetary value of their voting stock, which will probably irk many of them. (Meta tried to create Class C stock a decade ago to help Zuckerberg’s philanthropic efforts, but was stopped by a shareholder lawsuit.) But it will preserve the dominance of Zuckerberg’s voting stock. Zuckerberg’s tax worry isn’t the sole reason for creation of the Class C stock; it happens that Meta needs to raise money, fast, to reverse its diminishing free cash flow and to make future investments in Artificial Intelligence, in which it expects to invest about $825 billion. But the new stock structure was dictated by Zuckerberg’s threat to leave California.
The weird thing is that, even if Zuckerberg moved out of Palo Alto—he was threatening to Meta’s board to sell his house within days—he still wouldn’t be able to escape the wealth tax, because under Proposition 40 anybody who resided in California as of January 1, 2026, as Zuckerberg did, has to pay the tax. Zuckerberg consolidated his control over Meta with a bullshit threat to leave California based on a bullshit claim that he was at risk of losing control over his company. If I were on Meta’s board, I’d be rooting for the guy to throw a tantrum and quit.