Jefferson City, Mo. – Investors who benefit from the sale of shares, real estate and other assets could soon obtain an even greater benefit in Missouri, which is ready to become the first state of the United States to exempt the capital gains of their income tax.
The legislation that won the final approval on Wednesday would stop the capital gains tax this year for people and eventually eliminated it for corporations, if state income continues to grow. The tax repeal is now addressed to Republican governor Mike Kehoe, who has said he is “very supportive.”
Although the proponents hope that the economy can stimulate, the detractors affirm that the repeal of tax profits will mainly benefit the rich and will result in less fiscal income for public schools and services. The legislature led by Republicans exceeded the objections of the Democrats only after expanding the bill with the highest tax exemptions for older people and disabled residents and new sales tax exemptions for diapers and female hygiene products.
The unique size of the Missouri Income Tax occurs when the legislatures led by Republicans in at least eight other states have approved more traditional Reduance of the Income Tax Rate This year. It also comes How Congress weighs If renewing and expanding income tax exemptions promulgated during the first mandate of President Donald Trump in office.
Capital profits are profits of assets such as actions, cryptocurrencies or properties. The federal government taxes long -term capital profits, in assets held for more than a year, at a lower rate than ordinary income.
All states that fiscal income will also impose capital gains. Missouri is currently between the 32 states and the Columbia district that taxes capital profits at the same rate as wages and other income, according to the Foundation Foundation without profit. Eight states tax capital gains at a lower rate than other income.
Some states led by Democrat have been moving in the opposite direction. Maryland legislators approved a bill that would impose a capital gains tax of 2% to those with income more than $ 350,000. And Washington legislators recently approved the legislation to impose an additional 2.9% tax on capital profits of more than $ 1 million. Minnesota already imposes a surcharge for capital gains and other investment income for more than $ 1 million.
Defenders to eliminate capital gains tax say that the tax discourages investment and encourages people to keep assets instead of selling them and spending money in another part of the economy.
“When you gravel something you get less,” said Jonathan Williams, president and chief economist of the American Legislative Exchange Council, an association of legislators and conservative companies. “The idea is that, of course, you want more investment in your state.”
Although Alec has long backed the repeal of state -income taxes, the president of Missouri House, Pro Tem Chad Perkins said that the idea arrived last year from friends from a construction company owned by employees who was being beaten with the tax. He said that his legislation could also benefit family farmers who want to sell their land.
The Tax on Capital Profit Tax in “the lost economic opportunities, financial sclerosis, the lowest wages, all of which serve to make Missouri less competitive both nationally and internationally,” said Republican state senator Curtis Trent, who handled the bill in the Senate.
The opponents say that the rich will obtain the greatest reward.
The revocation of Missouri’s tax on capital profits would establish “a worrying precedent” nationwide and “worsened economic and racial inequalities,” said Sam Waxman, deputy director of state policy investigation at the Budget Center and Budget Policies and Policies.
A government study found that white families are more likely to inform capital profits than some minorities. Among the average income taxpayers, about 8% of white families benefited from the tax rates of the federal government on capital gains and dividends compared to only 3% of black families and 1% of Hispanic families, according to 2023 Report of the United States Treasury Department.
In Missouri, around 542,000 individual taxpayers of the rent reported capital gains in 2022, which amounted to only a fifth of all archivators, according to the Missouri budget project, a non -profit research group that opposes the repeal of taxes on capital gains. The group estimates that 80% of fiscal relief would go to the richest 5% of taxpayers.
Legislative investigators estimate that the repeal of taxes on Missouri capital gains could cost the State about $ 262 million annually when they are completely implemented. But that is disputed by supporters and opponents.
The Missouri budget project estimates that the cost could be almost $ 600 million annually.
Trent predicts that the repeal of taxes will trigger “the increase in economic growth (which) will result in higher tax revenues” over time.
Owen Zidar, Professor of Economics and Public Affairs at Princeton University, studied the impacts of 584 changes in the tax profits of capital in the states for four decades. Tax cuts on capital gains tend to result in more people to sell assets for profits, but not so much to compensate for lost tax revenues, he said.
Zidar said that he is skeptical about the statements that the repeal of capital earnings taxes of Missouri will attract a lot of investment and economic activity.
“I think it will be a substantial decrease in income,” he said.
