In Missouri, people who make money from selling stocks or houses might soon get more money. The state wants to be the first in the U.S. to not tax the money people make from selling these things.

A new law approved on Wednesday would stop a tax on profits from selling things this year for people. If the state gets more money, this tax could also stop for companies later. The law now goes to the Governor, Mike Kehoe, who said he supports it.

Some people hope this change will help the economy. But others think taking away this tax will mostly help rich people and mean less money for schools and public services. The politicians agreed to the change only after adding more tax help for older people and people with disabilities. They also added no sales tax on diapers and products for women.

Missouri is changing its income tax in a special way. This is happening at the same time that other states led by Republicans are making income taxes lower. Also, the government in Washington is thinking about continuing and making bigger the income tax changes that President Trump started.

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

When you sell things like stocks or houses and make money, it's called a capital gain. If you owned them for more than a year, the government taxes this money less than your normal salary.

Most states that tax income also tax the money people make when they sell things like stocks or property. This extra money is called capital gains.

Some states with Democratic leaders are doing the opposite. For example, last month, Maryland lawmakers made a law to add a 2% tax on profits from selling things like stocks for people who earn more than $350,000. And in Washington, lawmakers recently made a law to add another 2.9% tax on profits from selling things like stocks over $1 million. Minnesota already has an extra tax on profits from selling things like stocks and other money from investments over $1 million.

Why shouldn't we tax the money you make from selling things?

People who want to get rid of the tax on money made from selling things say it stops people from investing. They also say it makes people keep their things instead of selling them and spending the money.

When you tax something, people do less of it, said Jonathan Williams. He works for a group of politicians and businesses. He said, you want more investment in your state.

A politician wanted to stop a tax. His friends had a construction company and had to pay a lot of this tax. He also said it could help farmers who want to sell their land.

Senator Curtis Trent said that taxing the money people make from selling things like property or stocks is bad for Missouri. He said it means the state loses chances to grow its economy, has less money moving, and people get paid less. This makes Missouri less able to compete with other places.

Who would get more money because of the tax change?

People who don't like this idea say that rich people will get the most.

Sam Waxman said that stopping the tax on profits from selling things 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 government study found that white families often make more money from selling things like stocks than some minority 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.

In Missouri in 2022, about 542,000 people who pay income tax made extra money from selling things like property or stocks. This was only about 20% of all taxpayers. A group called the Missouri Budget Project thinks that 80% of the money saved on this tax would help the richest 5% of taxpayers. This group does not want to stop the tax.

How much money will the government lose if they stop the tax on profit from selling things?

People who study laws in Missouri think that if they stop a tax, the state could lose about $262 million every year. But not everyone agrees with this idea.

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, and this will mean more tax money later.

Owen Zidar, a professor, looked at how changing a tax on money made from selling things affected states for 40 years. He saw that when this tax was lower, more people sold things to make money. But the states still lost money because the tax rate was lower.

Zidar said he is not sure if getting rid of Missouri's tax on money made from selling things will bring a lot of new business and jobs.

I think we will have a big drop in income,