Zuckerberg's new Meta stock class could help cover California tax

Meta’s board has approved a new class of non-voting stock — Class C common stock — that takes effect in January, the company disclosed during its Wednesday earnings call. Meta says the shares are meant for capital raising, employee pay and acquisitions, including its costly AI buildout, all while preserving the voting structure that keeps Zuckerberg, Meta’s founder and CEO, in control — he holds around 60% of the vote.

The New York Times has since reported a second motive behind the new share class: it could help Zuckerberg cover California’s proposed “billionaire tax” if voters approve it, since the non-voting shares let him sell stock to pay the bill without giving up control of the company.

Proposition 40 — drafted by Berkeley tax law professors and backed by the SEIU United Healthcare Workers West union — calls for a one-time wealth tax of 5% on several hundred California billionaires, most of whom live in the state, applied to their net worth. Backers say it could raise as much as $100 billion over five years, mostly earmarked for healthcare, with the remainder going to food assistance and education.

The Times reports, based partly on a recent Meta SEC filing, that Zuckerberg pushed the board to shield him from the tax — telling members in September that he might list his Palo Alto home for sale if they couldn’t reach an agreement, a move that could have sparked a media frenzy. The stock plan came together soon after, according to the paper, and the filing shows Zuckerberg had been raising the tax issue with the board as early as July, with more discussions through August.

According to the filing, Meta will issue the new Class C shares as a one-time dividend — one share for every existing Class A or Class B share — which the company likens to a two-for-one stock split that leaves voting power unchanged. The filing is explicit about why that matters for Zuckerberg: it states the dividend “will allow Mr. Zuckerberg to immediately sell or transfer up to 20% of the shares of Class C common stock that he receives in the Dividend, representing 10% of his overall economic stake in the Company, for any reason, including so that he may pay his potential tax liability under California Proposition 40, if enacted into law, without affecting his majority voting control.” Because the dividend is one-for-one, that 20% cap on his new shares works out to just 10% of his total economic stake — and analysts estimate Zuckerberg could owe as much as $11 billion under the tax.

Meta, asked for comment, pointed TechCrunch to language in its earnings release tying part of the stock’s purpose to keeping Zuckerberg based in California, near Meta’s management and Meta Superintelligence Labs. Proposition 40 has also drawn fire from prominent Silicon Valley figures — Google co-founder Sergey Brin has spent heavily campaigning against it — and Democratic Rep. Ro Khanna, a supporter, suggested on X that Meta’s maneuver shows billionaires intend to stay and pay rather than leave the state.

Why it matters

Meta’s stock maneuver shows how far a trillion-dollar company’s founder will go to blunt a state wealth tax without ceding an inch of control, and it previews the kind of financial engineering other targeted billionaires may borrow if Proposition 40 passes.