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

A new law agreed on Wednesday would stop a tax on money made from selling things like property or stocks this year for people. The governor likes this new law.

Some people think stopping the tax on profits from selling things will help the economy. But others say it will mostly help rich people and mean less money for schools and public services. The Republicans in the government wanted to stop this tax. The Democrats didn't agree at first. But the Republicans added more tax help for older people and disabled people. They also added no sales tax on diapers and products for women. After these changes, the government agreed.

This is happening at the same time as other states are also lowering income taxes. Also, the US government is thinking about continuing or making bigger tax cuts that started when Donald Trump was president.

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

When you sell something like shares or a house and make more money than you spent, that extra money is called a profit. The government asks for some of this profit as tax. If you owned the thing for more than one year, the tax is not as high as the tax on your regular salary.

In Missouri and many other states, the money you make from investments is taxed like the money you make from your job. Some states tax investment money less.

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

Why should we stop taxing the money you make when you sell things for more than you paid?

Some people say that if we remove the tax on profits from selling things, it would be good for the economy. They believe this tax makes people not want to invest and keeps them from selling their things and spending the money.

If you tax something, people will want less of it, Jonathan Williams said.

A group called ALEC wanted to stop a tax on making money from investments. A politician named Chad Perkins got the idea from friends who own a construction company. They had to pay this tax. He said his new rule could also help farmers who want to sell their farms.

Republican politician Curtis Trent said a tax on profits from selling things like property or shares is bad for Missouri. He said it means fewer chances to make money, slower economic growth, and lower pay. This makes Missouri less competitive inside the state and with other countries.

Who would receive money if the tax is removed?

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

Sam Waxman said that stopping a tax in Missouri would be a bad example for other states. He also said it would make things unfair for people with less money and different races.

A government study found that white families often earn more money from selling things like stocks than some other groups. For families who earn a middle amount of money, about 8 out of 100 white families paid less tax on this money. But only about 3 out of 100 Black families and 1 out of 100 Hispanic families did.

In 2022, around 542,000 people in Missouri who pay income tax made money from selling things like stocks or property. This was only one in five people who paid taxes. A group called the Missouri Budget Project says that if the tax on this money is stopped, most of the tax help would go to the richest 5% of people who pay taxes.

How much money do we lose if we stop the tax on selling things for more money?

People who study laws think that if Missouri stops taxing the money people make from selling things, the state could lose about $262 million every year. But people who like this idea and people who don't like it do not agree on this number.

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

Trent thinks if the tax stops, the economy will get bigger and the government will get more tax money later.

Owen Zidar, a professor, looked at how changing taxes on investments affected things. He found that when these taxes go down, more people sell investments to make money. But, the government still loses money because the tax rate is lower.

Zidar said he doesn't believe taking away Missouri's tax on profits will bring many new businesses and jobs.

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