Soon, in Missouri, people who make money from selling things like stocks or buildings might not have to pay taxes on that money.

A new law agreed on Wednesday would stop a tax on profits from selling things like property or stocks for people this year. If the state gets more money, this tax might also stop for companies later. The law will now go to Governor Mike Kehoe, a Republican, who has said he really supports it.

Some people think stopping a tax on profits will help the economy. But others say it will mostly help rich people and mean less money for schools and public services. The Republican politicians passed the law, even though the Democrats didn't agree. They added more tax help for older people and people with disabilities, and also stopped the sales tax on diapers and products for women.

Other states have lowered income taxes this year. Congress is also thinking about more tax reductions.

What is a tax on the money you make when you sell something?

When you sell things like stocks or property and make money, that money is called a capital gain. If you own these things for more than a year before selling, the government takes less tax on this money than on your normal salary.

In the United States, if a state taxes the money people earn from their jobs, they also tax the money people make from selling things like stocks or property. Most of these states tax this money at the same rate as job money. But some states tax this money at a lower rate.

Some states led by Democrats are doing the opposite. For example, Maryland recently made a law to tax money from selling investments if you earn more than $350,000. Washington also made a law to add an extra tax on large amounts of money from selling investments. Minnesota already adds an extra tax on large amounts of money from selling investments.

Why should we stop taxing the extra money people get when they sell something for more than they paid?

People who want to get rid of this tax say it stops people from investing. They say it makes people keep their things instead of selling them and using the money in the economy.

Jonathan Williams said that when you tax something, people do less of it. He also said that states want more people and businesses to put money into their state.

Chad Perkins, a politician, got the idea to stop a tax from friends at a company last year. He said his plan could also help farmers who want to sell their land.

Republican state Senator Curtis Trent said that taxing the money made from selling things is bad for Missouri. He said it means the state loses business chances, has money problems, and people earn less. This makes Missouri less able to compete with other places.

Who would get help if the tax goes away?

People who don't like it say rich people will get the most.

Sam Waxman said that stopping the tax on money made from selling things like stocks in Missouri would be a bad example for the country. He also said it would make money problems and unfairness between different groups of people worse.

A study found that white families often make more money from selling things like stocks than some other groups. For families with average incomes, about 8% of white families paid less tax on this money. But only 3% of Black families and 1% of Hispanic families did. This information is from a report in 2023.

In Missouri in 2022, about 542,000 people who pay income tax made money from selling things like land or company shares. This was only about 20% of everyone who paid tax. A group called the Missouri Budget Project studies money and does not want to end this tax. They believe that if this tax ends, most of the money saved will go to the richest 5% of taxpayers.

How much will it cost to get rid of the tax on profits?

People who study laws in Missouri think that if the state stops taxing profits from selling things, it might cost about $262 million every year when it is completely done. But people who like the idea and people who do not like it both say this amount is not correct.

The Missouri Budget Project thinks it could cost almost $600 million every year.

Trent thinks that if the tax is stopped, the economy will grow more, and this will mean more tax money later.

Owen Zidar, a professor, looked at how taxes on money made from selling things changed in states over 40 years. He saw that when these taxes were lower, more people sold things. But this did not make up for the money the government lost from the lower tax rate.

Zidar said he doesn't believe that stopping Missouri's tax on profits from selling things will bring much new business and jobs.

He said he believes their income will significantly decrease.