Missouri House Passes Capital Gains Tax Exemption Bill Amidst Party Divide
By Rudi Keller, Missouri Independent
On Wednesday, Missouri House Republicans successfully passed a significant tax-cut measure that exempts capital gains from state income tax, sending the bill to Gov. Mike Kehoe. The legislation received no support from Democrats, though ten members voted "present," indicating partial agreement with certain provisions.
The new law will impact income earned in the 2023 calendar year, potentially reducing state revenue by approximately $430 million in its first year and around $340 million annually thereafter. House Speaker Pro Tem Chad Perkins expressed surprise at the absence of Democratic support, despite some previous bipartisan votes in the Senate.
During the debate, Democratic representatives voiced concerns over stagnating state revenues and potential funding cuts from federal programs. State Rep. Stephanie Hein described the bill’s provisions as superficially appealing, while Rep. Kemp Strickler cautioned against the long-term sustainability of the tax cut amidst existing budget priorities.
Federal data indicated that Missouri taxpayers reported $13.3 billion in capital gains income for 2022. If fully exempted, state revenue could decrease by over $600 million, raising alarm among Democrats who worry about adequate funding for essential public services, including education.
The bill also includes increases to the "circuit breaker" refundable property tax credit for seniors and individuals with disabilities, alongside a sales tax exemption for diapers and feminine hygiene products, cumulatively anticipated to lower state revenues by an additional $121 million.
While supporters argue the anticipated tax cut will stimulate economic activity, critics assert it primarily benefits a small percentage of high-income earners. As state revenues trend downward, Republicans promote spending cuts as a solution rather than raising taxes, further deepening the partisan divide on fiscal policy.
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