Of late, U.S. economic policy has been dominated by responses to short-term crises — the Wall Street bailouts, the economic-stimulus bill, and post-hurricane spending. Whether or not such interventions make sense, they divert attention from the urgent need to bolster America’s long-term competitiveness in the global marketplace.

While U.S. fiscal policy has been directionless, many of our international competitors have initiated dramatic tax reforms that put them at a distinct advantage for attracting outside investment and attendant job growth. Consider that 12 of the 30 nations in the Organization for Economic Cooperation and Development have capital gains tax rates of zero; meanwhile, Congress is dithering about extending our 15-percent capital-gains tax rate. And note that while numerous industrial countries — including Australia, New Zealand, and Sweden — have abolished their death taxes, the U.S. death-tax rate is set to jump to 55 percent in 2011.

Even where the U.S. has instituted encouraging reform — such as the dividend tax rate cut of 2003 — it lags behind its peers. Most OECD countries have lower tax rates on dividends when you measure the total combined corporate and individual burdens. The combined U.S. dividend-tax rate is 49 percent including state taxes — substantially higher than the OECD average of 43 percent.

Corporate tax rates offer an even more striking comparison. Our high rate of 40 percent is a neon sign advertising America’s hostility to job-creating capital. U.S. policymakers sat on their hands as the European Union slashed the average corporate tax rate from 38 percent in 1996 to just 23 percent today. If a country stands still in today’s global economy, it falls behind, as Dan Mitchell and I explore in our book, Global Tax Revolution.

America is not a unique free-market haven anymore, but many U.S. policymakers are oblivious to this new reality. Here is Barack Obama in the first presidential debate responding to John McCain’s idea to cut the corporate tax rate: “There are so many loopholes that have been written into the tax code … that we actually see our businesses pay effectively one of the lowest tax rates in the world.”

It is simply not true that our effective corporate tax rate is “one of the lowest” in the world. Effective tax rates take into account statutory rates and elements of the tax base, such as depreciation deductions. In a new Cato Institute brief, Jack Mintz, one of Canada’s top tax experts, finds that the U.S. rate of 36 percent is the eighth highest of the 80 countries studied, and is far above the average rate of 20 percent.

The reality is: Marginal effective tax rates drive investment flows. Mintz and others have illustrated that relationship statistically, but you need only look at individual companies to see the effects of taxes. It is no secret, for example, that Intel Corporation is able to cut its tax bill substantially when it builds new semiconductor plants in China rather than in the United States.

Obama’s rhetoric about corporate tax loopholes rings partially true, though. Corporations do work hard to avoid taxes, employing dozens of legal (and expensive) ways to shift profits from high-tax to low-tax countries. But rather than dismissing the importance of America’s 40-percent statutory tax rate, Obama should be leading the charge to cut it, since tax avoidance is driven directly by high statutory rates and consumes resources that might otherwise be used more productively.

Obama’s remarks in the presidential debate contained another rich irony. His railing against “tax cuts to corporations that are shipping jobs overseas” implicitly admits that corporations are highly sensitive to taxes. That’s why a U.S. corporate tax rate cut would generate a surge in reported profits and ultimately higher tax revenues. In other words, there is a corporate tax Laffer curve.

Jack Mintz estimated the corporate tax Laffer curve for OECD countries, and he figures that the peak of the curve is 28 percent. In other words, the 40 percent U.S. corporate tax rate could be sliced by at least 12 percentage points to spur economic growth without the government losing any revenue over the long run. Corporate profits that aren’t taken by government (or wasted by companies trying to ease their tax burden ) typically create additional products and services — and jobs — that help expand the economy. If government took a thinner slice, the result would be a bigger economic pie.

Most of our trading partners have figured out these dynamic aspects of corporate tax cuts. Just this year, Britain, Canada, Germany, Italy, South Korea, and Spain cut their corporate rates. We need to follow suit. When Congress is finished trying to fix yesterday’s economic failures, it should start focusing on future economic success by pursuing major tax reforms.