Report: Elimination of capital gains tax makes headway in Jeff City

Editor's note: This article from Missouri News Network has been published with permission.

A bill that would eliminate state taxes on capital gains was heard and quickly passed Tuesday by the Missouri Senate General Laws Committee.

House Bills 594 and 508, sponsored by Rep. Chad Perkins, R-Bowling Green, are the same as Senate Bill 46 sponsored by committee Chair Sen. Curtis Trent, R-Springfield.

Both bills allow a taxpayer to “deduct 100% of all income reported as a capital gain for federal income tax purposes,” according to bill summaries.

If passed, the elimination of the tax is estimated to reduce the general revenue fund by about $335 million in the first year. For later years, there is a projected loss of about $233 million.

The bill passed the House on Feb. 13. Sen. Tracy McCreery, D-Olivette, asked Trent about the speed at which the House version of the legislation was being moved through the Senate.

“As the handler of the Senate bill, I certainly love my own bill, but love the underlying policy even more,” Trent said. “We just want to have as many options as possible as we try to think through this policy.”

Passing the House bill without amendments is a faster way for final approval than moving the Senate bill. That process would then have to undergo hearings and votes in the House. Adoption of amendments would cause additional delays for more votes.

Trent initially held up a vote on the bill until a third Republican committee member was present so it could pass on a 3-2 vote.

At a Missouri Press Association luncheon in January, Gov. Mike Kehoe said eliminating the capital gains tax was his top tax priority for this year.

Legislators have a number of tax cut bills under consideration at a time when state revenue projections are flat. There is also little understanding of the scope of potential spending cuts by the federal government under the Trump administration. Federal funds make up almost half of the state’s annual revenue.