By Elaine Kamarck and

James Pinkerton

The nation is still trying to work its way out of one of the worst economic slumps in the post-war period. In South Carolina, where the unemployment rate continues to hover around 10 percent, the need to create new jobs is especially acute.

The Palmetto State has been an example of how, working together, South Carolina’s leaders have managed to transform the state’s economy over the last several decades. Today’s challenges are as important as ever. South Carolina Sen. Senator Lindsey Graham is right when he says it is “important that we come up with some sustainable policies to turn this country around” as is Senator Jim DeMint who recently said, “the tax code is the number one job killer in America. High rates and tax complexity are robbing Americans of their time and money, and driving jobs overseas.”

It may come as a surprise to some, but Graham and DeMint share one aspect of a strategy for economic recovery with none other than President Obama who, in last year’s State of the Union, called for reform of the tax code for America’s business. Even while the government is divided – with Democrats in control of the White House and the U.S. Senate and the Republicans running the U.S. House of Representatives, we can make progress on corporate tax reform.

It is in America’s best interest to fundamentally rewrite America’s corporate tax code. The current 35 percent U.S. corporate tax rate is among the world’s highest while, at the same time, it is a complicated maze of deductions and credits forcing corporate managers to make decisions based on what is best from a tax standpoint, not always what is best from the standpoint of job creation. That is why, according to the Heritage Foundation, reducing the corporate tax rate to 25 percent would create up to 581,000 jobs annually across the country over the next decade. Other experts agree that the current tax code distorts business decision making; encouraging them to spend money on things that will reduce their tax bill instead of on things that are in the best interests of long-term economic growth.

A flatter, streamlined corporate tax code will make America more competitive, leading to increased economic growth at a time when it is badly needed. This in turn, will help reduce the deficit and put more South Carolinians back to work.

Cutting the corporate tax rate to a more globally competitive rate of 25 percent will help bring new business to the United States and help keep existing businesses here. Such a reduction could be accompanied by putting many of the deductions and credits that distort the marketplace on the table, making the tax code simpler and fairer.

Currently, the code puts the government in the position of picking winners and losers, which may explain why so many stories have appeared during the economic downturn about corporations realizing record profits while paying very few tax dollars. In the mid-1980s, America boasted one of the lowest rates in the industrialized world, which was an important factor in creating 20 million new jobs during that period.

In the intervening decades international competitors raced to lower their corporate tax rates, leaving us with the second highest rate in the world. By lowering the corporate tax rate to something close to the Organization for Economic Cooperation and Development (OECD) average of 25%, the U.S. economy would again be able to grow in a healthy manner, producing plenty of good jobs at good wages. The Journal of Public Economics found that by reducing the corporate tax rate 10 percentage points, economic growth would increase by one to two percent. A study released by the Milken Institute concluded that lowering the rate to 25 percent would boost gross domestic product by an additional 2.2 percent and increase employment by 2.13 million workers.

Our international competitors have taken these facts to heart and have lowered their tax rates with much success. Already, many members of the OECD are implementing or preparing for another round of cuts, including two of our closest trading partners, Canada and Great Britain. If we are to remain competitive with our nation’s major trading partners we need to reform the tax code, making it fairer and simpler and improving the prospects of growth and jobs in the U.S. economy.

Elaine Kamarck, advisor to President Bill Clinton and Vice President Al Gore, and James P. Pinkerton, a White House domestic policy adviser to Presidents Ronald Reagan and George H.W. Bush, are co-chairs of The RATE Coalition, a bipartisan group advocating for corporate tax simplification and rate reduction.