In Missouri, people who make money from selling things like stocks or houses might soon not have to pay tax on that money.

A new law was agreed on Wednesday. It would stop a tax on money made from selling things this year for people. It could also stop it for companies if the state gets more money. The person in charge, Governor Mike Kehoe, likes this idea.

Some people hope this change will help the economy. But others say that stopping the tax on profits will mostly help rich people. They believe it will mean less money for schools and public services. The politicians from one group agreed with the other group only after they added more tax help for older people and people with disabilities. They also said there would be no sales tax on diapers and products for women.

Missouri has a special tax rule. Other states are also lowering their taxes. And Congress is thinking about keeping and making bigger the tax cuts that President Trump started.

What is a tax on the money you get when you sell something for more than you paid for it?

Capital gains are the money you make when you sell things you own, like stocks or a house. If you sell these things after owning them for more than a year, the government taxes this money less than your normal income.

In Missouri, when you sell something for more money than you bought it for, the extra money is taxed like the money you get from your job.

Some states led by Democrats are doing the opposite. For example, Maryland recently added a small tax of 2% on money people make from selling things like stocks, but only if they earn more than $350,000. Washington also recently added another small tax of 2.9% on this kind of money, but only if it is more than $1 million. Minnesota already adds an extra tax on money from selling things like stocks and other ways people make money from their savings, but only if it is more than $1 million.

Why should we stop taxing the money people make when they sell things like houses or shares?

Some people think that if the tax on money made from selling things like stocks is removed, people will invest more. They also believe it will encourage people to sell their assets and spend the money, which helps the economy.

Jonathan Williams, who leads a group of politicians and companies, said that when you put a tax on something, people do less of it. He said that states want more companies to put money into their state.

ALEC has wanted to stop state taxes on profit for a long time. Chad Perkins said he got the idea last year from friends at a company. They had to pay this tax. He said his new law could also help farmers who want to sell their land.

Republican state Senator Curtis Trent said that taxing the money made from selling things means Missouri loses business chances, money moves slower, and people earn less. He said this makes Missouri less able to compete with other places.

Who would get help if the tax is taken away?

People who don't agree say rich people will get the most benefits.

Sam Waxman, who works for a group that studies money and rules, said that stopping a tax in Missouri would be a bad example for the country. He also said it would make problems with money and different groups of people worse.

A government study found that white families often make more money from investments than some other groups. For families who earn an average amount of money, about 8% of white families paid lower taxes on this money from investments. But only 3% of Black families and 1% of Hispanic families did this, according to a report from 2023.

In Missouri in 2022, about 542,000 people who pay income tax earned money from selling things like property or stocks. This was only one out of five people who paid taxes. A group that studies money in the state believes that most of the tax cut would help the richest 5% of people.

How much money will we lose if we stop the tax on profits?

People who study laws in Missouri think that if the state stops taxing the money people make from selling things for more than they bought them, the state might lose about $262 million each year later on. But people who support this idea and people who are against it do not agree on this number.

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

Trent believes that stopping the tax will make the economy grow, which will bring in more tax money later.

Owen Zidar, a professor, studied how changing taxes on profits from selling things affected states for 40 years. He found that when these taxes were lower, more people sold things and made money, but the states still lost tax money.

Zidar said he doesn't believe that stopping Missouri's tax on profits will bring a lot of new money and jobs.

He said he thought they would earn much less money.