What California’s proposed billionaire tax means
If approved by voters in the November 3 election, the measure would impose a one-time tax of 5 per cent on the wealth of California residents whose net worth exceeds $1 billion. Zuckerberg is the world’s sixth-richest person, with an estimated net worth of more than $220 billion, according to Forbes. The proposed levy would put his tax liability at more than $11 billion.
The agreement followed Zuckerberg telling Meta’s board last month that he was considering selling his Palo Alto home in anticipation of the proposed tax. He later reached the deal and committed to staying in California for eight years unless “material unforeseen circumstances” arise that make it “prudent or advisable for him to reside elsewhere”, according to the filings.
A few hundred billionaires live in California, according to the non-partisan Legislative Analyst’s Office. The proposed tax would apply to anyone whose primary residence was in the state as of January 1, 2026.
Tax revenue proposed for healthcare, education and food assistance
Most of the revenue raised through the tax would be used to make up for federal funding cuts to healthcare. Another 10 per cent would go towards education and food-assistance programmes.
Supporters, including SEIU United Healthcare Workers West and Vermont Senator Bernie Sanders, say the measure would help ensure that the ultra-rich pay their fair share. Opponents, including California Governor Gavin Newsom, a Democrat, have warned that it could prompt the state’s wealthiest residents to leave. They say this could create future budget problems because California relies heavily on wealthy residents for income-tax revenue.
SEIU United Healthcare Workers West said Zuckerberg’s agreement with Meta disproved opponents’ claims. “This is the nail in the coffin to months of scare tactics claiming that billionaires are fleeing California,” Suzanne Jimenez, the union’s chief of staff, said in a statement.
How other billionaires are responding to the proposed tax
Zuckerberg’s agreement offers another indication of how the ultrawealthy are preparing for the proposed tax, which targets wealth generated largely through investments rather than income received from work. Other billionaires, including Google co-founders Sergey Brin and Larry Page, have begun cutting ties with California.
Brin and other technology executives and venture capitalists have contributed millions of dollars to a political action committee opposing the tax and supporting other ballot measures intended to nullify it. The committee, Building a Better California, has raised more than $333 million, with Brin accounting for 30 per cent of the total. By comparison, the “Yes on 40” campaign has raised $32.7 million.
Meta links new shares to AI investment plans
Zuckerberg has received an annual salary of $1 since 2013 for serving as Meta’s CEO. In its regulatory filings, Meta said he would not receive additional compensation and argued that he would “effectively be paying to serve as the company’s chief executive officer while residing in California” if the wealth tax is enacted.
The company said allowing Zuckerberg to sell the new shares, representing 10 per cent of his overall economic stake in Meta, would help mitigate the impact of the proposed tax.
Meta also said the new class of shares was intended to strengthen its ability to raise capital for investments in artificial intelligence infrastructure. The shares could also be used for employee compensation and acquisitions, among other purposes.
“It will expand our funding tools and give us flexibility to invest behind the unprecedented momentum we are seeing across every part of our business driven by AI,” Meta Chief Financial Officer Susan Li said during an earnings call.
The arrangement would allow Zuckerberg to sell part of the new class of non-voting shares, potentially meet a wealth-tax bill of more than $11 billion and retain majority ownership of Meta. It would also give the company another means of raising funds for AI infrastructure, employee compensation and acquisitions, while Zuckerberg has committed to remaining in California for eight years unless unforeseen circumstances make it prudent or advisable for him to live elsewhere.