People who sell things like stocks or houses and make money from it might soon pay less tax on that money in Missouri. Missouri could be the first state in the U.S. to do this.

A new law that was agreed on Wednesday would stop the tax on profits from selling things like property or stocks this year for people. It could also stop this tax for companies later, if the state earns enough money. This plan to end the tax will now go to the governor, Mike Kehoe, who is happy with 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 services. The politicians in charge passed the law after adding more tax help for older and disabled people and stopping the tax on things like diapers and products for women.

Missouri has a special rule for income tax. This is happening while other states are lowering their income taxes. Also, the government is thinking about giving people more tax breaks, like they did when Donald Trump was president.

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

When you sell things like stocks or property and make money, it's called a capital gain. If you keep the thing for more than a year before selling it, the government usually taxes this money less than the money you get from your job.

In Missouri and 32 other states, the tax on money you make from selling things is the same as the tax on your job income. In eight states, this tax is less than the tax on job income.

But some states led by Democrats are doing the opposite. For example, in Maryland last month, they made a new law. This law adds a small tax of 2% on the money people make from selling things like stocks, but only if they make more than $350,000 a year. And in Washington, they recently made a law for an extra tax of 2.9% on this money if it is more than $1 million. Minnesota already has an extra tax on money from investments if it is more than $1 million.

Why is it a good idea to stop taxing the extra money you make when you sell something?

People who want to stop the tax on selling things say it makes people not want to invest. They say it makes people keep their things instead of selling them and using the money.

When you tax something, people buy less of it.

A politician wanted to stop a tax because his friends' company paid a lot of it. He also said it would help farmers who want to sell their land.

Republican state Senator Curtis Trent said the tax on profits makes Missouri less competitive. He said it means fewer chances for the economy and lower pay for workers.

Who would get money back because of the tax change?

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

Sam Waxman said that stopping the tax on investments in Missouri would be a bad example for other states. He also said it would make problems with money and problems between different races worse.

A government study found that more white families said they made money from selling things like stocks than some minority families.

In Missouri, about 542,000 people who pay income tax made money from selling investments in 2022. This was only 20% of all taxpayers. A group called the Missouri Budget Project says that if the tax on this money is removed, most of the help will go to the richest 5% of taxpayers.

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

People who study laws think stopping a tax in Missouri could cost the state about $262 million every year. But people who like the idea and people who don't like it disagree.

The Missouri Budget Project thinks it could cost almost 600 million dollars each year.

Trent thinks that if the tax is stopped, the economy will grow, and this will bring in more tax money for the government later.

Owen Zidar, a professor at Princeton University, looked at how changing a tax rule affected people in different states for 40 years. He found that when this tax was lower, more people sold things to make money. But he also saw that the government still lost tax money because of the change.

Zidar said he doesn't believe that stopping a tax in Missouri will bring many new businesses and jobs.

He said, "I think our income will go down a lot."