The Facebook IPO could bring California as much as $500 million in tax revenues from capital gains. Depending on whom you talk to, that's a significant help or a drop in the bucket.
Headlines across this state are trumpeting the news: The Facebook initial public offering (IPO) – a stock sale that could happen as early as May – will help close the state’s budget gap.
Closer examination shows that state tax revenues could benefit to the tune of about $500 million dollars, more than the $450 million in tax revenues generated when Google went public in 2004. But how much will that help the state?
To H.D. Palmer, spokesman for the state Department of Finance, “clearly, this is a big deal.”
He acknowledges the caveats: The impact depends when people sell their stock (likely spread over 18 to 24 months), and what the market conditions are at the time. And tax-privacy laws will make it hard to pinpoint exactly how much the IPO will help. But he is overjoyed.
“I have told folks that, on behalf of a grateful state, I will go to [Facebook founder] Mark Zuckerberg’s house and wash his windows and mow his lawn.”