SJR 96: Ban on Taxing Unrealized Gains
Sponsor: Sen. Joe Nicola
SUPPORT
Constitutional shield against wealth taxes.
SJR 96 would amend Article X of the Missouri Constitution to add a new section 4(e) stating that no taxes shall be imposed on any unrealized gains accrued on any asset prior to the sale of such asset. This effectively constitutionally bars state or local governments from taxing "paper" increases in value on farms, homes, and investments, protecting Missourians from wealth taxes and "mark-to-market" schemes.
What Does This Bill Do?
- Absolute Ban on Unrealized Gain Taxes: Adds Article X, ยง4(e) to the Constitution, strictly forbidding the state from imposing taxes on "paper" gains accrued on any asset before it is actually sold.
- Protects Assets: Covers farms, homes, small businesses, and investments, ensuring owners cannot be taxed on rising valuations until they realize that income.
- Preemptive Shield: Blocks future legislatures from implementing "mark-to-market" or wealth-tax mechanisms that have been proposed at the federal level.
Constitutional or Critical Context
Missouri does not currently tax capital gains on a "mark-to-market" basis. However, this amendment provides a permanent constitutional shield, preventing future legislatures from adopting such schemes. The broad wording ("any asset," "notwithstanding any provision") ensures no clever drafting can sneak a wealth tax in through the back door.
Red Flags & Recommended Amendments
These "red flags" are not issues we have with this legisation. In this case, we are only providing to note possible court involvment. We would not support changing the language in this bill to attemp to avoid them.
Property Tax Interaction
While intended to stop income/wealth taxes, the broad language might enable legal challenges against current property tax assessments, arguing they tax unrealized value. This may force a positive debate on property tax fairness.
Judicial Interpretation
Courts will ultimately decide the edges of what constitutes an "unrealized gain" or "asset" in complex financial instruments, though the core command is clear.
Act for Missouri Recommendation:
Act for Missouri recommends a SUPPORT position. This is a clean, single-subject amendment that aligns with the moral principle that government has no claim on wealth that hasn't been realized. It strengthens economic liberty and prevents future confiscatory tax schemes.