Zuckerberg strikes deal with Meta to prepare for California’s proposed billionaire tax

# Meta Reaches Agreement to Help Zuckerberg Pay Potential California Billionaire Tax

Meta CEO Mark Zuckerberg has reached an agreement with the company’s board that could allow him to cover a proposed California billionaire wealth tax without surrendering his controlling stake in the social media company, according to regulatory filings published this week.

The proposal, which California voters are scheduled to consider on Nov. 3, would introduce a one-time tax of 5% on residents with net worth exceeding $1 billion. Zuckerberg, whose fortune exceeds $220 billion according to Forbes, could face a tax bill of more than $11 billion if the measure is approved and applies to him.

The agreement, announced Wednesday, would allow Zuckerberg to retain control of Meta while selling some newly issued nonvoting shares “for any reason,” including to meet potential obligations under the proposed wealth tax.

### Negotiations Over Zuckerberg’s Future in California

According to The Washington Post, discussions over the arrangement became tense, with directors involved in the negotiations reportedly considering resignation. Zuckerberg later informed a broader group of directors that he intended to put his Palo Alto home on the market, raising the possibility that he could leave California.

The prospect of his departure added urgency to the discussions as the company sought to maintain its leadership structure and keep its founder based in the state.

Meta described the arrangement as its “Founder Alignment Agreement.” The company said retaining Zuckerberg’s leadership in California was “critically important” amid what it called a dramatic and unprecedented transformation in the technology industry and global economy driven by artificial intelligence.

### Meta’s AI Ambitions Drive Spending Higher

Meta has undergone major changes in recent years, including operational adjustments during the COVID-19 pandemic, mass layoffs and restructuring following an earlier hiring surge, and renewed scrutiny of child safety after a whistleblower scandal. The company also committed substantial resources to its metaverse ambitions, adopting the Meta name as part of that strategic shift.

Artificial intelligence has since become a major focus of its investment strategy. Meta reported $34.91 billion in capital expenditures, including principal payments on finance leases, for the September quarter.

On Wednesday, the company said it expected to spend as much as $145 billion this year on AI projects. Its projected AI spending has increased for each financial quarter so far this year, reflecting the scale of its efforts to expand computing infrastructure and develop AI capabilities.

These investments have placed additional pressure on the company’s cash flow. Meta reported negative cash flow for the first time since going public 14 years ago and plans to increase spending further in the coming year.

Chief Financial Officer Susan Li said the new stock arrangement would also provide Meta with additional options for financing future AI investments, linking the agreement to the company’s broader financial and strategic priorities.

### California Wealth Tax Faces Opposition From Billionaires

The proposed wealth tax could affect approximately 250 billionaires in California, whose combined wealth exceeds $2 trillion. The measure has drawn opposition from several wealthy residents, some of whom are reportedly considering moving out of the state.

Google co-founder Sergey Brin has reportedly taken steps to restructure aspects of his residency and financial arrangements in response to the proposal. These measures reportedly include shifting his primary residence to Nevada and changing the location of certain assets to reduce potential exposure to California tax obligations. Brin has also reportedly opposed the measure and contributed resources to efforts seeking to resist or influence it.

Other technology leaders have expressed different views. Nvidia CEO Jensen Huang said he was “perfectly fine” with the proposed tax and intended to remain in Silicon Valley.

### A Tax Proposal With Implications for Silicon Valley

The proposed measure has brought questions about personal wealth, corporate leadership and California residency into the debate over the state’s tax policy. For Meta, the agreement offers a way to address Zuckerberg’s potential tax obligations while preserving his voting control and giving the company more flexibility to finance its AI expansion.

The ultimate impact will depend on the outcome of the November vote, the proposal’s final implementation and whether it applies to Zuckerberg under the relevant rules. Until those questions are resolved, the agreement represents a contingency arrangement rather than confirmation of a final tax liability.