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The Republican presidential primary is heating up, with the leading candidates expected to take the stage in California this week for the second GOP debate.
Experts will be closely watching the Wednesday showdown – hosted by FOX Business at the Ronald Reagan Presidential Library in Simi Valley, California – for any discussion of key tax policy issues.
"The candidates are going to have to have a position on the expiration of the Tax Cuts and Jobs Act," John Gimigliano, principal-in-charge of the federal tax legislative and regulatory services group at KPMG, told FOX Business. "These massive components of the law expire at the end of 2025."
Enacted by former President Trump in 2017, the law drastically overhauled the nation's tax code, including reducing the top individual income tax bracket to 37% from 39.6% and nearly doubling the size of the standard deduction.
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2024 Republican presidential candidates Asa Hutchinson, from left, Chris Christie, former Vice President Mike Pence, Ron DeSantis, Vivek Ramaswamy, Nikki Haley, Senator Tim Scott and Doug Burgum during the Republican primary presidential debate hoste (Photographer: Al Drago/Bloomberg / Getty Images)
Those changes to the individual section of the tax code are poised to sunset in 2025, meaning that millions of Americans will face steeper levies if the law is not extended.
The GOP presidential hopefuls that will appear on the stage Wednesday night are unlikely to stray from supporting an extension of the tax cuts for individuals, according to Gimigliano. However, the topic is likely to be a source of contention during the general election.
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"On the Republican side, I think they're all kind of aligned around the issue, that the Tax Cuts and Jobs Act was good, and we should extend this thing," he said.
The Internal Revenue Service building in Washington, D.C., on April 17, 2023. ((Photo by STEFANI REYNOLDS/AFP via Getty Images) / Getty Images)
The problem, however, is that the Congressional Budget Office estimates extending the TCJA would add roughly $3 trillion to the federal budget deficit.
The original law was partially paid for by the so-called SALT deduction cap, which limits the amount of state and local taxes that Americans can deduct from their federal taxes to $10,000. That cap is also poised to end in 2025.
However, the SALT cap as a revenue generator has lost some potency since 2017, thanks to fresh workarounds.
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"This is going to be another challenging thing for them to navigate," Gimigliano said.
The final debate list has not yet been finalized, but the expected debate participants include Florida Gov. Ron DeSantis, businessman Vivek Ramaswamy, former Vice President Mike Pence, former South Carolina Gov. Nikki Haley, South Carolina Sen. Tim Scott and former New Jersey Gov. Chris Christie.
Trump, the front-runner, has indicated he will not participate in the debate.