The Missouri Senate on Monday approved a House bill to end the capital gains tax with some changes.
The capital gains tax is imposed on the sale of assets like real estate and stocks. Supporters of House Bill 594 say that ending the capital gains tax will fuel economic growth in the state.
“We’ve crafted a package that does what we were primarily seeking to do, which is provide tax relief that is aimed at helping the average person in Missouri, that is aimed at creating economic growth, that is aimed at helping our state attract more businesses, more jobs, more opportunity,” said Sen. Curtis Trent, R-Battlefield.
Opponents, including some Republicans, have expressed concern that the proposal would largely benefit the already wealthy and potentially create dangerous budget shortfalls for the state.
The legislature is currently in the process of finalizing the state budget for the coming year. The House approved its version of the budget last week, which will now be reviewed by the Senate.
Sen. Maggie Nurrernbern, D-Kansas City, said during floor debate that the legislature shouldn’t be considering major tax cuts while the current draft of the state budget for next year doesn’t fully fund public schools.
“We’re talking about very few folks that this would benefit,” Nurrernbern said. “We’re underfunding public education at the same time we’re giving a $300 million tax credit to our most wealthy individuals.”
Capital gains taxes are imposed both on individuals and on corporations. The version of the bill approved by the Senate cuts the tax on individuals and allows for a potential removal of the corporate tax as well, but only if certain triggers in state economic growth are met.
The bill’s attached fiscal impact note estimates that removing the capital gains tax on personal income alone would represent a loss of over $100 million to the state’s general revenue fund each year.
The compromise version of the bill approved by the Senate includes other tax-related measures, such as a tax exemption for diapers and feminine hygiene products.
Tax cuts have been a major topic of the legislative session, with bills also moving forward that would reduce or remove other taxes, including the state income tax.
The Senate approved the bill 27-6.
HB 594 will now return to the House. If the House approves the Senate’s changes to the bill, the measure will proceed to the governor’s desk.
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