California ballot includes billionaire tax proposal

On November 3, Californians will vote on Proposition 40, which proposes a one-time 5% tax on the assets of billionaires whose net worth exceeds one billion dollars. This tax would apply to approximately 200 residents of California and would target assets such as shares, company participation, and financial investments, not just income.

Tax differs from similar European proposals

Unlike the "Zucman tax" in France, which imposes an annual minimum deduction, the Californian tax would be collected once, though taxpayers could spread the payment over five years at an additional cost. The tax would also apply to individuals who resided in California on January 1, 2026, even if they have since left the state.

Several billionaires have moved to avoid the tax

Several billionaires, including Google co-founders Larry Page and Sergey Brin, PayPal co-founder Peter Thiel, and Uber co-founder Travis Kalanick, have moved to other states to avoid the tax. Proposition 40 is supported by the Service Employees International Union (SEIU-UHW) and Democratic Senator Bernie Sanders, who hope to raise about 100 billion dollars over five years to address budget cuts in healthcare.

Opposing proposals may neutralize the tax

The outcome of the vote may not be decisive, as two other proposals, 41 and 42, will be on the ballot on the same day. These are financially backed by large fortunes, including Sergey Brin, and aim to prevent the implementation of the tax. If either of these proposals receives more favorable votes than Proposition 40, the tax could be neutralized even if a majority of Californians support it.

Governor opposes the tax and supports alternative proposal

Governor Gavin Newsom opposes the tax, fearing it could drive billionaires out of the state and reduce tax revenues. He supports Proposition 42, which would broadly prohibit new wealth taxes. Mark Zuckerberg, whose fortune is estimated at 247 billion dollars by Bloomberg, was initially considering leaving California to avoid the tax.

Zuckerberg negotiates compromise to stay in California

However, he has changed his mind, and his company, Meta, has negotiated a compromise to retain him. According to a document filed with the SEC, Zuckerberg had to make significant concessions with a special committee of the board of directors to create a new category of shares without voting rights. This would allow him to monetize part of his fortune without losing control of the company.

Zuckerberg retains control while committing to stay in California

Zuckerberg currently controls about 61% of the voting rights of Meta through shares with enhanced voting rights, even though he owns only 13% of the company's shares. The new mechanism would allow him to gradually sell up to half of his stake without losing control. To create this new category of shares, Meta will conduct a stock split of two for one for existing shareholders.

Meta aims to secure funding for AI development

The new shares without voting rights should begin to be traded in January. In exchange for these concessions, Zuckerberg has committed to remaining domiciled in California for eight years, though this commitment includes a clause allowing him to move under unforeseen circumstances. Meta's decision to retain Zuckerberg is also driven by the need for significant funding to finance its ambitions in artificial intelligence.

Investors question Meta's AI spending

The company expects to require several hundred billion dollars in financing over the coming years. The creation of new shares without voting rights could allow Meta to raise capital without diluting the control of its founder. However, investors have expressed doubts about the company's recent expenditures in AI, which have led to significant stock market sanctions.

Support for the tax proposal is declining

Recent surveys show that supporters of Proposition 40 are losing ground, with a Politico poll dated October 19 indicating that 46% of voters plan to vote yes, while 43% plan to vote no. Not all billionaires in Silicon Valley oppose the tax, however. Jensen Huang, the boss of Nvidia, whose fortune is close to 185 billion dollars, recently stated on CBS that he would consider it a "privilege" to pay the tax.

Only two billionaires in California exceed 100 billion dollars

This position contrasts with that of other major figures in the tech industry. In California, only two sector bosses whose fortune exceeds 100 billion dollars currently reside: Jensen Huang and Mark Zuckerberg.