Mark Zuckerberg threatened to leave California over wealth tax

Meta CEO Mark Zuckerberg expressed a willingness to relocate his primary residence outside California if voters approve a billionaire wealth tax, known as Proposition 40, according to a regulatory filing. Concerned about the potential impact on Meta's operations, Zuckerberg informed the company that he was evaluating a move, which would be made public and commented upon by Meta employees, potentially impacting management decisions.

To mitigate the financial burden of the tax, Zuckerberg agreed to remain a California resident for eight years, provided Meta maintains its headquarters in California. The filing stated that the company's board approved a new class of nonvoting common stock to enable Zuckerberg to sell shares and pay the wealth tax without needing to sell voting shares, thereby preserving his control over Meta.

Zuckerberg committed to staying in California for the duration of this period, ensuring Meta's leadership remains intact during a challenging and competitive industry landscape. The billionaire wealth tax aims to raise $100 billion from California's wealthiest residents, primarily to bolster the state's healthcare system. However, economists have raised concerns about the potential for billionaires to relocate, which could result in reduced tax revenue.

The new class of nonvoting stock, effective in January, serves multiple purposes, including raising capital for AI infrastructure investments and compensating employees, without diluting Zuckerberg's control over the company.