One-third of Californians Live Near the Poverty Line. Can Steve Hilton’s Tax Relief Plan Help?

One-third of Californians were living at or near the poverty line in 2024, according to a new report from the Public Policy Institute of California.

The report found that 13.6 million residents were at or near poverty, with the highest poverty rates concentrated in Los Angeles County. Of those, roughly 6.7 million were living below the California Poverty Measure.

For the average family of four, the California Poverty Measure set the poverty threshold at $46,200 a year. That threshold is an estimate of the income needed to afford basic necessities such as housing, food, clothing, and utilities.

Steve Hilton, the Republican candidate for governor, is pointing to the findings as evidence of California’s affordability crisis. In response, he’s promoting a proposal to eliminate state income taxes on the first $150,000 Californians earn.

The Daily Signal spoke with Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute, about whether policies aimed at boosting economic growth could help reduce poverty. While he did not comment specifically on Hilton’s proposal, Winegarden said lower tax rates generally encourage work, investment, and economic growth.

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“Looking at the report, it is a bit higher than the census estimates of poverty that include income support payments,” he said. “But the census numbers are high, nearly 20%. So, the idea that poverty is a real problem is correct. Plus, the PPIC [Public Policy Institute of California] report is slightly updated, and likely things have gotten worse.”

“If poverty is a problem, the question is how to resolve it. History demonstrates that sustained robust growth is the best way to alleviate poverty. In California this requires regulatory reforms that will reduce costs for consumers and businesses,” Winegarden added.

The PPIC report also found that about 2.5 million additional Californians would have fallen into poverty in 2024 without safety net programs such as CalFresh, California’s food assistance program.

While Hilton has proposed tax relief as one way to address California’s affordability crisis, other policy experts argue that the state must also lower the underlying cost of living.

Edward Ring, director of water and energy policy at the California Policy Center, said California should prioritize infrastructure spending over expanding social programs, arguing that investments in roads, water, energy, and housing would create jobs while reducing everyday costs.

According to the Hoover Institution, California devoted roughly 20% of its state budget to infrastructure in the 1960s, compared with an estimated 2% to 3% today.

“You used to have this huge slice of government budgets that went to infrastructure. Nowadays, that’s a small slice, and everything is going to social programs,” Ring said. “If you used the money for infrastructure, you’d create jobs, you’d lower the cost of living, you’d make it easier for people to live independently, and you wouldn’t need all those social programs.”

Ring argued that California has created a cycle in which policies increase the cost of living while making more residents dependent on government assistance.

“They make it harder and harder to run a business. They make it harder and harder to create value and earn wealth. At the same time, that increases the cost of living, which makes it more and more necessary to give people benefits.”

Whether through tax relief, infrastructure investment, or other policy proposals, the PPIC report makes one thing clear: Californians are looking for solutions to an affordability crisis that will be front and center in November’s gubernatorial election.