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Senate holds hearings for capital gains cuts and class action reform

The Senate Committee on General Laws heard Senate bills 46 and 47, both of which could see traction this session. Senator Curtis Trent, chair of the committee, was the sponsor of both bills.

SB 47
The committee started off with hearing SB 47. The bill amends the class action rules in the Supreme Court to mirror the Federal Rules of Civil Procedure. Key changes include requiring class action certification orders to define the class, claims, issues, and defenses, and specify findings and conclusions to support the decision. The order must also contain provisions for appointing class counsel. Notice to class members can be done through various means, but must include essential information in plain language, such as the nature of the action, class definition, and time for requesting exclusion. The rule also requires court approval for class actions to be settled, dismissed, or compromised, with consideration given to fairness, reasonableness, and adequacy of the proposal.

It would alter Missouri’s rule 52 and change it to mirror Federal Rule 23, which saw its latest alteration adopted by the Supreme Court in 2018. So far 19 states, such as Texas, Wisconsin, California, Arizona and others have adopted legislation similar to Rule 23.

Some proponents of the bill argued that it would help to discourage out-of-state firms soliciting Missouri residents from igniting class action lawsuits against companies based here in the state.

Those against the bill argued against one line of the bill in particular, that being a simple word change from MAY to SHALL. Those against the bill stated that this simple change could add an extra one to two years into the litigation process.

Individuals involved in the bills creation told me this issue is one which can easily be resolved.

SB 46
Senator Trent then proposed SB 46 before the committee.

The bill summary reads “For all tax years beginning on or after January 1, 2025, this act authorizes an income tax deduction for one hundred percent of all income reported as a capital gain for federal income tax purposes.” A simple removal of Missouri’s capital gains tax.

Senator Trent argued that the capital gains tax has an adverse effect on the state’s growth and that it punishes those who invest in our state. As it stands now, Missouri’s capital gains tax rate is the same rate as the income tax, that being 4.7%.

Representative Chad Perkins is currently sponsoring an identical bill in the House. HB 594, also known as “The Missouri Revitalization Act,” will be receiving a House hearing today at noon before the Commerce Committee in House Hearing Room 1.