Meta has reached an agreement with Mark Zuckerberg to support him in paying a potential California wealth tax aimed at billionaires. The social media company, which owns Facebook, Instagram and WhatsApp, announced on Wednesday night that the arrangement would keep its chief executive living in California, where Meta's headquarters are located.
Under the deal, Zuckerberg will receive new shares that could be sold to help cover a multibillion-dollar tax bill if California passes a one-off billionaire tax. In return, he has committed to remain a resident of the state, or wherever Meta maintains its base, for eight years.
Proposition 40 and the tax threat
Californians will vote early next month on Proposition 40, a one-off 5% tax on the roughly 250 billionaires who live in the state. 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.
In response, Meta is creating a new class of non-voting shares via a two-for-one stock split for all existing shareholders. 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.
Political and public response
Recent polling has shown that Prop 40 remains short of majority support with voters. Tech billionaires have been spending heavily to fight the measure, including the Google co-founder Sergey Brin, the Palantir co-founder Peter Thiel and the former Google CEO Eric Schmidt.
Rohit Khanna, the US congressman representing California's 17th congressional district, has described Prop 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. "In Trump's America, working people pay more than they should, while billionaires are so unburdened that they are becoming trillionaires. In the America we seek, billionaires and trillionaires will pay their fair share, while working people will be unburdened."
Meta's financial results
Meta also reported a 26% rise in revenues for the last quarter to $64.6bn, beating expectations of $63.3bn. But profits fell by 37% to $13bn, dragged down by a $9.9bn charge related to Meta's lawsuit over child protection and social media addiction failings.
In a separate case, on Wednesday a judge in New Mexico ordered Meta to pay $25bn following a trial found the company had misled the public about how it handled Facebook user data. Meta also revealed that it had cut its headcount to 66,775 at the end of September, 15% fewer than a year ago.
