California Likes Facebook IPO's Tax Possibilities
California could reap a tax windfall of as much as $2.5 billion from Facebook Inc.'s initial public offering, a state analyst said Monday, in the first official forecast of the IPO's impact on the cash-strapped state.
The offering is forecast to bring in $500 million of income-tax revenue through stock sales in fiscal 2012, ending in June, followed by $1.5 billion in 2013 and $450 million from 2014 to 2016, according to a report from the Legislative Analyst's Office, a nonpartisan government entity that advises the legislature. The Menlo Park, Calif., social network plans its IPO for the spring, according to people familiar with the matter. A Facebook spokesman didn't respond to a request for comment.
The Analyst's Office expects California's total general-fund revenue to be $91.8 billion in fiscal 2013. Facebook's $1.5 billion boost would make up less than 3% of income-tax revenue of $55.7 billion that year, the analyst expects, but a much bigger percentage of the deficit.
At the valuation of $75 billion to $100 billion that the state used for Facebook, the IPO would create windfalls for some of California's highest-profile residents. Facebook's founder and chief executive, Mark Zuckerberg, stands to reap up to $28.4 billion, with as much as $7.6 billion for co-founder Dustin Moskovitz and $2.5 billion for investor Peter Thiel. It is unclear how much stock they or other shareholders plan to sell after the IPO, which complicates any forecast of California's gains.
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