CALIFORDABLE Pitch Hides Brutal Cuts

California state flag waving against a blue sky — Photo: Ketanof / Shutterstock

A Republican running for California governor wants to erase state income taxes for anyone earning up to $150,000 a year, paid for by cuts he says will total tens of billions of dollars.

Story Snapshot

Steve Hilton’s tax plan would eliminate state income tax on the first $150,000 of earnings and set an 8% flat rate above that.
The campaign says the cut could cost the state up to $65 billion a year in revenue, offset by cutting high-speed rail funding, trimming agencies by 5%, and targeting Medicaid fraud.
Hilton calls the broader package “Operation Zero Waste” and has paired it with promises of $3 gas and lower utility bills.
California’s budget leans heavily on high earners, with a top tax rate of 13.3%, making large cuts politically risky to fund.
Democrats control the state Legislature, giving Hilton’s rival Xavier Becerra a structural advantage in blocking the plan.

What Hilton Is Promising Voters

Steve Hilton’s campaign website lays out the plan in plain terms. Under his proposal, Californians would pay zero state income tax on their first $150,000 of income. Anyone earning more would pay a flat 8% rate on income above that threshold. Hilton has pushed the message hard online, framing it as a fix for what he calls Sacramento’s broken system.

Hilton posted the plan on social media in September, tying it to a promise of $3 gasoline and writing that it would make the state “CALIFORDABLE”. He has repeated the pitch at campaign stops, telling Action News in August that the message is simple: cheap gas, lower utility bills, and tax-free income up to $150,000 for working families.

The Spending Cuts Behind the Tax Cut

Hilton calls his funding plan “Operation Zero Waste.” At a town hall covered by the Los Angeles Times, he said the tax cut could be paid for by ending high-speed rail funding, trimming state agencies by 5%, and cracking down on Medicaid fraud. He has described the same offsets in interviews with Axios and other outlets as his top priority if elected.

The numbers behind those promises have shifted. One report said Hilton estimated the plan would save about $25 billion a year, while his own campaign later acknowledged the tax cut could mean up to $65 billion less for the state government to work with. Neither figure comes with a published line-by-line budget showing exactly which programs would shrink or by how much.

Earlier in the campaign, some coverage described the tax-free threshold as $100,000 rather than $150,000. Hilton’s current campaign site and recent interviews settle on the higher number, but the shift shows the plan has changed shape as the race has moved forward.

Why California’s Budget Makes This Risky

California’s income tax system already relies heavily on its wealthiest residents. The state has a top marginal rate of 13.3%, the highest in the country, and low- and middle-income earners pay little or nothing. That structure means tax revenue swings sharply with the stock market and capital gains, since high earners’ income is the most volatile part of the tax base.

That volatility is why big tax-cut promises in California tend to draw close scrutiny. State budget officials have repeatedly flagged how quickly revenue projections can move when top earners’ income shifts, which is part of why large, promised offsets like cutting high-speed rail or finding fraud savings are hard to verify until they appear in an actual budget bill or legislative analysis.

CA next Governor?

Xavier Becerra (D) is the clear favorite to be California's next governor. He's up about 22 to 25 points on Republican Steve Hilton in September polls, and he and the outside groups backing him have raised about $49M to Hilton's $19M. Critically, his record… pic.twitter.com/2xqKp8dHHx

— McNoodle (@reachMcNoodle) October 1, 2026

Hilton still faces a steep climb to turn the proposal into law. Democrats hold majorities in both chambers of the state Legislature, and his rival in the governor’s race, Xavier Becerra, has clashed with him directly over taxes during debate appearances. Even if Hilton wins in November, passing an 8% flat tax and funding it through agency cuts would require legislative buy-in he does not currently have.

For now, the $150,000 threshold remains a campaign promise rather than a bill moving through Sacramento. Voters frustrated by California’s cost of living may find the pitch appealing, but the plan’s success depends on spending cuts that have not yet been detailed in a public budget document, scored by nonpartisan analysts, or tested against the state’s existing fiscal rules.