Talk about the ultimate “Please don’t go” gesture: Meta Platforms [NASDAQ:META] created a new, non-voting Class C common stock to ensure the company’s co-founder and CEO, Mark Zuckerberg, could stay put in California \u2014 without having to pay a big tax bill. <\/p>\n
Here’s how it happened. <\/p>\n
Must Read A special stock issue <\/p>\n
Meta announced the move in a message to shareholders on Oct. 21, explaining<\/a> that they created the new stock to help Zuckerberg “pay his potential tax liability under California Proposition 40, if enacted into law, without affecting his majority voting control.” <\/p>\n Zuckerberg can “immediately sell or transfer up to 20% of the shares of Class C common stock that he receives,” which they said represents 10% of his economic stake in the company. <\/p>\n The announcement notes that Zuckerberg “could become liable for a significant, multi-billion dollar tax payment based on his ownership of stock in the company” if California’s Proposition 40 passes. The proposal<\/a> is a one-time 5% tax on billionaires in California, with 90% of the revenue set to be spent on health care costs for residents. It goes to a vote on Nov. 3 and, if passed, Zuckerberg could owe around $11.2 billion in taxes based<\/a> on a net worth of just over $224 billion. <\/p>\n Meta, in their message, said that Zuckerberg informed them he was “evaluating relocating his primary residence outside California” and that a Special Committee representing the company “believed it is critically important” for him to remain based in the Sunshine State to manage the company in person and “effectively drive our performance during this era of unprecedented challenge and competition in our industry.” <\/p>\n Meta didn’t return Moneywise’s request for comment. <\/p>\n Read More: Vanguard reveals what’s coming for U.S. stocks \u2014 and it could be bad news for this group of investors<\/a> <\/p>\n Prop 40 faces pushback \u2014 even as it’s projected to raise billions <\/p>\n Zuckerberg, however, isn’t the only one receiving the new Class C stocks. Meta confirmed that all shareholders will get “a dividend of one share of Class C common stock for each outstanding share of Class A common stock and Class B common stock” beginning in January 2027. <\/p>\n The news dropped the same day that a New Mexico judge levied<\/a> a $25-billion judgement against Meta in a Cambridge Analytica-related privacy case, according to reporting in The New York Times \u2014 and a few months after the company agreed to an $18-billion settlement<\/a> in a case revolving around social media safety. <\/p>\n Meanwhile, it’s far from a sure thing that Proposition 40 will even pass. Recent polls<\/a> show a slim advantage for those against the proposition \u2014 a pushback partially fuelled by opposition from billionaires including Mark Cuban<\/a> and Google co-founder Sergey Brin \u2014 the latter of whom spent $100 million<\/a> to fight it. <\/p>\n Even Gov. Gavin Newsom, a Democrat, opposes<\/a> it, citing worries about an overall revenue shortfall and how that would impact public service funding if the tax causes many of the state’s wealthy to relocate \u2014 as Zuckerberg suggested he might. <\/p>\n One analysis<\/a> argues the tax revenue could hit $30 billion, adding the “value of permanently lost income tax collections from departures more than offsets the one-time wealth tax revenue, yielding a net present value of negative $38.9 billion.” <\/p>\n But proponents of Proposition 40 believe the tax could be a boon for the state, with a May 2026 study<\/a> claiming it “could raise about $100 billion, with comparatively minor impacts on income tax revenue” if enacted. <\/p>\n What To Read Next <\/p>\n Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now<\/a>. <\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: Mark Zuckerberg threatened to leave California over its 5% wealth tax \u2014 so Meta created a new stock class to keep him<\/a> <\/p>\n This article provides information only and should not be construed as advice. 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