Statement from Missouri Budget Project CEO Amy Blouin
With today’s vote in the Missouri House, the state legislature has forwarded to Governor Kehoe a tax bill that will reduce state revenue by at least half a billion dollars annually. This comes at a time when our state is already facing significant budget pressures, as well as uncertainty regarding federal funding in the coming years.
House Bill 594 will exempt capital gains from state income tax. Like the vast majority of states, Missouri taxes capital gains – the profits/earnings on the sale of stocks, cryptocurrencies, real estate and other valuables – through the individual income tax structure, just like other income.
The new exemption would send hundreds of millions to Missouri’s wealthiest. 80 percent of this tax giveaway goes to the top 5 percent of Missouri taxpayers, with more than two-thirds going to the top one percent – or those with incomes averaging $1.9 billion a year.
The House made clear its priorities when it decided to advance to the Governor this giveaway for an elite few, even when it chose not to fully fund K-12 education in its version of next year’s state budget.
State legislators will already be facing budget shortalls in the coming years because of previously approved tax cuts that are being implemented.
Moreover, discussions underway in Congress could result in a disastrous blow to Missouri. Cuts at the federal level could shift more than $2 billion in health and nutrition costs to the state of Missouri. That would mean devasting budget cuts for years to come and would lead to an economic crisis.
The legislature’s choice to prioritize a special interest tax giveaway is irresponsible and a mismanagement of taxpayer dollars. It’s also a slap in the face to the bulk of Missouri taxpayers who are struggling to afford groceries and who already pay a higher portion of their income in state and local taxes than do the folks who will get a windfall from the capital gains exemption.
Although we remain deeply concerned about the underlying bill, some additions made in the Senate will provide much needed assistance to older adults and Missourians with disabilities who have fixed incomes. Specifically, the bill includes updates to the Missouri property tax credit, also known as the circuit breaker tax credit.
The credit helps to offset the cost of property tax for older adults and Missourians with disabilities who have fixed incomes. However, neither income eligibility nor the amount of the credit have been updated in 17 years. As a result, fewer Missourians who need it can qualify. Those that do often receive a very small credit.
The improvements to this credit will help Missourians stay in their homes and communities. The circuit breaker improvements will help nearly 195,000 households and demonstrate the type of tax policy improvements the state legislature should prioritize.
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The Missouri Budget Project is a nonprofit public policy analysis organization that analyzes state budget, tax, and economic issues.
For more information about the Missouri Property Tax Credit/Circuit Breaker tax credit, see:
Improving Missouri’s Property Tax Credit Would Help Seniors, Missourians with Disabilities Stay in Their Homes
For more information about Missouri’s budget, how our state investments compare to other states (and our own in previous years), and the status of further tax cuts, see:
With Repeated Tax Cuts, Missouri’s Investments in Its Residents Have Eroded
For more information about federal cuts to Medicaid & SNAP and the impact on Missouri, see:
Federal Cuts to Medicaid & SNAP Would Force Missouri Legislators to Make Significant Cuts to Services
