Ritesh Kumar Yadav
National Repoter
Published: · 303 views
Kathmandu. To reduce potential financial damage from billionaire taxes, Facebook's parent company Meta has agreed to give Chief Executive Officer Mark Zuckerberg additional shares. Meta has found such a solution as a proposal to tax billionaires is moving forward in the state of California.
There is a proposal in California to impose a one-time five percent tax on residents with a net worth of more than one billion US dollars. If this proposal is passed in the November vote, Zuckerberg, whose wealth is estimated to be over two hundred billion dollars, may have to pay approximately 10 billion dollars in additional taxes.
Due to the potential financial damage from the proposed tax, Zuckerberg had told Meta's board of directors that he was considering leaving California and selling his assets there. Following that, the company made a new agreement with him, the BBC has reported.
According to the agreement, Zuckerberg will receive additional shares of the company, and he will be able to sell those shares quarterly. This will make it easier for him to convert the value of his ownership in the company into cash. The company has stated that the new share structure will not change his control over Meta.
Meta had formed a special committee to finalize the agreement with Zuckerberg. The negotiations with the committee were long and, in some instances, controversial, according to the company's financial statements. This agreement will be effective for eight years as long as his main residence remains in California. A provision has been made for the agreement to remain in effect even if the proposed tax is not passed.
Meta has stated that the main objective of the agreement is to encourage Zuckerberg to lead the company while remaining in California. The company says that the founder's leadership is important as the technology industry and the global economy are undergoing rapid changes due to artificial intelligence (AI).
Recently, Meta has increased investment in AI product and tool development from its strategy focused on the virtual platform 'Metaverse'. The company plans to spend up to 145 billion dollars on AI projects this year.
Due to increasing investment in AI, Meta has faced a negative cash flow situation for the first time in 14 years since being listed on the stock market. The company is spending more on operations and investments than it is earning. The company plans to invest further in AI next year as well.
According to Meta's Chief Financial Officer Susan Lee, the new share structure will also provide more options for raising funds in the future for AI projects.
However, investors are concerned as it is unclear how Meta, which is spending a large amount on AI, will generate further revenue from it. Amidst this concern, the company's share price fell by more than seven percent on Thursday. The BBC reported that this led to a decrease of more than 100 billion dollars in the company's market capitalization.
According to the American for Tax Fairness campaign group, there are approximately 225 billionaires living in California. Discussions are also ongoing about the impact on their wealth and potential economic consequences if the proposed tax is implemented.
Comments (0)
Log in to leave a comment.
