Missouri House Passes Bill Eliminating Capital Gains Tax

Missouri House Bill 594, which aims to eliminate capital gains tax in the state, has successfully passed a vote in the state House of Representatives and is now awaiting Governor Mike Kehoe's signature. The bill proposes a 100% income tax deduction for any capital gains income, leveraging the fact that the Missouri tax code does not explicitly differentiate between capital gains and income tax.

According to attorney Aaron Brogan, the mechanism outlined in HB 594 is unique. He compared it to the federal state and local tax (SALT) deduction, where individuals can deduct a certain amount of tax paid in state and local taxes. Brogan noted that this bill represents an inverse approach, which he has not seen before.

The timing of this bill is noteworthy as it follows proposals from former US President Donald Trump to overhaul the country’s income tax system through comprehensive reform. Trump had proposed eliminating federal income tax and replacing the federal tax revenue with money raised through import tariffs. He suggested that this plan would create more jobs in the United States as factories return to avoid import duties on their finished products.

However, the market reaction to Trump's tariff proposals was overwhelmingly negative, with significant losses recorded in various markets. Despite this, the passage of Missouri House Bill 594 signifies a significant step towards tax reform in the state, potentially influencing similar legislative efforts in other regions.