Meta board placates Zuckerberg after threat to leave California if voters approve wealth tax measure
Polls suggest a tight result on Prop 40, as some tech barons threaten to move out of state if it passes
Meta Platforms has struck a deal with Mark Zuckerberg, Reuters has reported, in a move spurred by a California ballot measure, part of the Nov. 3 midterm elections, that has sparked heated debate and hundreds of millions in campaign spending.
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that → placate → spending
Under the deal, Zuckerberg will get non-voting shares he can sell to potentially foot a multi-billion-dollar tax bill in the event the proposal is approved, in exchange for a commitment to remain a resident of California, or wherever Meta maintains its headquarters, for eight years, Meta said on Wednesday.
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Meta → get → Wednesday
Zuckerberg, the world's sixth richest person according to Forbes, told Meta he was considering moving his primary residence outside California because Proposition 40, the ballot measure dubbed the "California wealth tax," could expose him to a massive tax liability, potentially forcing him to sell voting shares to pay it.
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Proposition → accord → it
Proposition 40 asks Californians whether to impose a one-time 5 per cent tax on the state's billionaires, and needs over 50 per cent support to pass.
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Proposition → ask → support
State health care programs would be the biggest beneficiaries of proceeds raised through the fund, with money also going to state food assistance programs and public education.
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money → raise → programs
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U.S. → catch → interference
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The parent company of Facebook and Instagram said Zuckerberg needs to continue to manage the company from its Menlo Park headquarters at a time of "unprecedented challenge and competition in our industry.
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Zuckerberg → hurt → industry
Meta says it needs to raise "hundreds of billions of dollars" over several years to finance its AI-related growth plan.
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it → say → plan
Meta will issue a new class of non-voting Class C common stock in January 2027.
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Meta → issue → January
Zuckerberg, who has a net worth of about $240 billion, can immediately sell 20 per cent of the Class C shares he receives, representing 10 per cent of his overall economic stake in the company, allowing him to pay a potential tax bill from Prop 40 without losing voting control.
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him → have → control
Brin equates tax to Soviet-style oppression
Backers say California's measure would generate $100 billion US for health care, food assistance and education.
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measure → equate → care
But skeptics peg the revenue estimate at closer to $40 billion US and say it could also drive some billionaires out of the state, depriving California of future tax revenue and investment.
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it → peg → revenue
Sergey Brin, Google co-founder, has spent more than $100 million US to defeat the ballot measure.
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Brin → spend → measure
"I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union.
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it → flee → Union
I don't want California to end up in the same place," Brin recently told the New York Times.
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Brin → want → Times
Google co-founder Sergey Brin is shown on Oct. 8 during an event at the U.S. Institute of Peace in Washington, D.C. Brin has spent millions trying to defeat California's Proposition 40 ballot measure.
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Brin → show → measure
Darien Shanske, a law professor at the University of California-Davis, who helped draft the proposal, told CNBC that relocating wouldn't limit the tax exposure of the ultra wealthy.
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relocating → draft → wealthy
Any billionaire residing in the state on Jan. 1, would still be taxed, given the state's tax laws, he said.
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he → reside → laws
Prop 40 is supported by, among others, California Democrat Ro Khanna in the House of Representatives and independent Sen. Bernie Sanders of Vermont.
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Prop → support → Vermont
"Are we destined to live in an oligarchic society begging for crumbs while our economic and political lives are controlled by a handful of the wealthiest people on Earth?" Sanders said at a rally in California earlier this month.
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Sanders → destine → California
Passage of the measure far from certain
The measure hasn't elicited a tidy split of progressives and Democrats in favour versus billionaires against, however.
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measure → elicit → billionaires
Nvidia CEO and co-founder Jensen Huang, for example, has shrugged off the proposal.
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Huang → shrug → proposal
"The fact that I can afford to pay $8 billion in taxes over five years is a privilege," Huang told CBS News earlier this week.
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Huang → afford → News
"I feel it's a privilege.
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it → feel → ?
And nothing would give me more joy than to be able to pay even more taxes."
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nothing → give → taxes
Democratic gubernatorial candidate Xavier Becerra, seen at a Los Angeles campaign stop on Oct. 15, doesn't believe Proposition 40 is an adequate way to fund state services.
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Proposition → see → services
Meanwhile, outgoing Democratic Gov. Gavin Newsom opposes Prop 40 and backs the Brin-introduced Proposition 42, which would seek to amend the state constitution to ban such tax proposals after Jan. 1, 2026.
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which → oppose → Jan.
Newsom's position earned a rebuke from outspoken actor Mark Ruffalo, who called it "beyond sad" on social media.
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who → earn → media
Messaging directly to Newsom's account, Ruffalo said Democrats need someone who is "tough when it comes to the real imbalances people are struggling with every day: billionaires vs. people and the planet.
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people → message → people
But current Democratic gubernatorial candidate Xavier Becerra and the California Teachers Association (CTA) are also among the individuals and groups opposed to the measure, arguing that while well-intentioned, it is a complex and unsustainable funding measure.
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it → oppose → measure
The CTA is focused on Proposition 3, which would raise funds through a state income tax hike on high earners.
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which → focus → earners
California voters have only approved one in three citizen initiatives historically.
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voters → approve → initiatives
As well, California ballot measures typically need robust early support, political analysts say, as history has shown the undecided are more apt to choose No when it comes to time to vote.
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it → need → time
"California ballot measures tend to lose support over time, and if it's polling below 50 per cent in August, that's not a good sign for its prospects," John Pitney, a professor of politics at Claremont McKenna College, told Reuters in a report published Sept. 30.
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Pitney → tend → report
A Citrin-Politico poll released this week indicated that, of those who took a position, 46 per cent of survey respondents favoured Prop 40 while 43 per cent were opposed.
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cent → release → Prop
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