One issue that investors will be monitoring in the run-up to the U.S. elections is whether the Tax Cut and Jobs Act of 2017 (TCJA) will be extended next year when many provisions are set to expire. While the legislation included changes in corporate and personal taxes, investors have focused mainly on the reduction in corporate tax rates, which were the largest in U.S. history.

The act is widely considered to be the signature legislation of the Trump administration. One of the principal motivations was to make the U.S. tax code competitive with the rest of the world by lowering the marginal corporate tax rate from 39 percent to 21 percent, roughly the average for OECD countries. Another goal was to spur business capital spending, which had slowed after the 2008 financial crisis.

The Biden administration, however, is at odds with extending the Tax Cut and Jobs Act, except for the provision that granted tax cuts to households earning less than $400,000. In a Bloomberg interview earlier this year, Treasury Secretary Janet Yellen said that the president is fixated on tax fairness: “He’s going to be sure that tax cuts disappear for those corporations, and we’re not negotiating new tax breaks for wealthy individuals.”

The case for extending corporate tax cuts rests on four considerations: First, is it effective in lessening outsourcing? Second, does it incentivize businesses to increase capital outlays? Third, will the........

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