Well. I’m jetting over the Atlantic right now on my way back from vacation. And, man, was that ever needed! Not just the R&R in an interesting and beautiful place, but also the nearly complete unplugging from the shitshow that is the American political system right now. Distance can provided clarity. In this case, it simply provided much needed… distance.
So what’s one of the first headlines I see when I reengage by opening my laptop and clicking on the Wall Street Journal site to see if the bubble has burst and whatever meager savings the Mrs. and I have has completely disappeared?
Mark Zuckerberg Threatened to Leave California. Meta’s Board Cut Him a Deal.
Meta’s CEO feared a proposed billionaire tax would force a major share sale, threatening his voting control
A deal? Zuck needs a deal?
A proposed billionaire tax had Mark Zuckerberg thinking about leaving California. Provisions around the 2-for-1 split of Meta Platforms’ stock are designed to keep him in the state—and help him pay a potential tax bill.
As Meta’s board negotiated the terms of the share split with the CEO, Zuckerberg told directors he was evaluating whether to leave the state in response to a proposed first-of-its-kind wealth tax, according to a new regulatory filing.
Proposition 40, proposed by a healthcare union, would levy a one-time, 5% tax on the net worth of those with net assets of $1 billion or more living in California on Jan. 1 of this year. Its novel approach—taxing assets, rather than income—has prompted some of the state’s wealthiest residents to consider moves to lower-tax states, including Florida and Texas.
Ahhh. Ok. The dreaded billionaire’s tax. Where Zuck - with an estimated net worth of $240 billion - would have to pay a one-time tax of approximately $12 billion, leaving him semi-destitute with a new net worth of only approximately $228 billion. 😒
Side Note: a Wealth Tax is not a “novel approach”, as the article claims. Historically, several states have levied taxes on intangible personal property (i.e., stocks, bonds and other non-physical assets). And, of course, there are property taxes, which are absolutely wealth taxes that basically every homeowner in the U.S. pays, regardless of whether they are a billionaire or not.
But Zuck needed a deal for that?! Let’s read on (bold emphasis mine):
If California voters pass the measure on Nov. 3, Zuckerberg would owe a “significant, multi-billion dollar tax payment” based on his Meta shares, the company said in the filing. His tax bill could force a share sale that would reduce his voting interest, the company said.
Ohhh. I see. Zuck may have his ability to forever control META put in jeopardy because his “voting interest” may be diluted. If only his college buddies had known about different classes of shares and different “voting interests” when they brought the Zuckster in on Facebook at the beginning (a boy can dream…).
What to do then? Let’s find out, shall we (as always, bold emphasis mine):
Zuckerberg’s negotiations with Meta’s board about the impact of the potential tax, disclosed in a lengthy regulatory filing, offer a rare window into how the threat of the new measure is impacting decision-making by some of the state’s powerful companies and their leaders.
Meta on Wednesday announced the creation of a new class of nonvoting stock to fund its continued AI expansion, to be issued to existing shareholders as a dividend. To align Zuckerberg’s interest with the company’s, his new shares will be “stapled” to the original ones, preventing him from selling them without also selling his voting shares. The shares will be gradually released from that arrangement over a period of eight years.
Zuckerberg will be able to immediately sell up to 20% of his new Class C shares, representing 10% of his financial stake in Meta, “for any reason, including so that he may pay his potential tax liability under California Proposition 40, if enacted into law.” He agreed to maintain primary residence in the same state as the company’s headquarters for the next eight years, barring “material unforeseen circumstances.”
Wow! The Zuckman is clever. He negotiated a deal with Meta’s board. I’ll bet those negotiations were tough since one of the board’s primary responsibilities is to oversee and review the CEO - Mark Zuckerberg himself. I wonder if Zuck had any one-on-one talks with the board chair, who is none other than - Mark Zuckerberg himself! Yep - those negotiations must have been incredibly tense. I’m just glad there were no conflicts of interest that clouded those “negotiations”.
I guess Zuck got his deal. Meta gets him hanging around locally for another 8 years while the Z-Man gets Meta to essentially pay for any taxes he has to pay to sell stock to pay his billionaire’s tax.
After reading this, I immediately called Wypoxic son #1 and Wypoxic son #2 and insisted they negotiate similar terms with their current employers when it’s time for their annual reviews. I’m sure that will go well and they will thank Dad profusely!
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What is the moral of this uplifting and inspiring tale, you ask? Besides Zuck living happily ever after?
Let’s get serious for a brief moment.
First, corruption is not limited solely to the current inhabitants of the U.S. government, their friends and cronies and family members. The private sector has its own share as well.
Second, the economic playing field in the U.S. is tilted - incredibly steeply - with corporate C-Suite members and their lackey boards at the top of the pitch and the rest of us at the bottom. It’s tilted at such a steep angle not as a natural matter of course, but due to laws passed by elected officials who are showered with cash from these very same people.
Third, gross inequality, market manipulation, and the hoovering of assets by an elite few - yes, the Epstein Class - is unsustaoiable and one of the main reasons for the election of Trump and societal instability we are dealing with in the current moment (of course, Zuckabilly the Genius knows this, which is why he is building a private compound on a remote A Hawaiian island that includes an underground living “bunker” that is bigger than all of the houses on my street combined).
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There are some really simple common-sense changes that could be made to our laws to rein in this madness.
Get rid of separate classes of stock, so every shareholder in a public company gets one share, on vote. Currently, Zuckerberg owns approximately 13.5% of Meta's total outstanding shares but controls 60.8% of its total voting power.
Ban CEOs and other C-Suite executives from sitting in the board of directors of the company they are in charge of running. Even my cat understands the conflict presented when a CEO is also the Chair of the Board tasked with overseeing the CEO.
Outlaw all compensation related to corporations paying for the taxes that CEOs (and any other employees) incur for selling their shares in the company (in economic parlance, this is called a “tax gross-up”, and - yes - it is gross). In essence, make CEOs bear the same burden that us “normies” bear when we sell stock (if we can even afford to own any).
It’s the corruption stupid. And it’s everywhere in the time of Reagan to Trump!
Bare Naked Ladies - If I Had a Million Dollars
