“America’s high corporate tax rate and worldwide system of taxation — a toxic combination — discourage U.S. companies from sending their foreign-source income home, make U.S. companies vulnerable to foreign acquisition and give an advantage to our international competitors. The chairman’s proposal would solve these problems.”

It’s no secret that America is losing its competitive edge. Our antiquated federal tax code is largely to blame. “A child of 5,” Groucho Marx quipped, “would understand this. Send someone to fetch a child of 5.”

Unfortunately, it’s not that simple. But just last week House Ways & Means Chairman Dave Camp offered the first tangible proof that someone in Washington truly understands what needs to be done if the U.S. is to remain competitive internationally.

Throughout the year, Congress’ tax-writing committees have held hearings to consider a comprehensive overhaul of America’s income tax. Chairman Camp began by asking U.S. businesses what they need to be competitive. We told him. And on Oct. 26, Camp delivered.

He proposed what promises to be the first of three interlocking tax-reform packages: a draft plan for modernizing our corporate tax code.

America’s high corporate tax rate and worldwide system of taxation — a toxic combination — discourage U.S. companies from sending their foreign-source income home, make U.S. companies vulnerable to foreign acquisition and give an advantage to our international competitors. The chairman’s proposal would solve these problems.

The U.S.’ reliance on a worldwide system of taxation punishes multinational businesses that choose to headquarter in the U.S. rather than offshore. Under the worldwide system, U.S. corporations are subject to a second layer of tax on foreign earnings.

Ironically, this tax is triggered when foreign profits are sent to the U.S. to invest, pay down debt, issue dividends or hire new workers. Rather than pay this punitive tax on repatriated profits, many American corporations simply leave this money abroad.

Instead of tweaking the tax code around the edges or throwing a one-year homecoming dance for foreign profits, the Camp plan would address this problem by moving the U.S. to a permanent territorial system of taxation and building a revenue-neutral bridge to get there.

This bridge, described by some as “deemed repatriation,” levies a 5.25% tax (payable over eight years) on all foreign earnings now held offshore whether or not those funds are actually repatriated. I view this one-time assessment as a fair “toll fee” for moving from our outdated worldwide system to a territorial system where companies can repatriate future profits to the U.S. under a 95% exemption — a system similar to those enjoyed by our non-U.S. competitors.

Should the one-time 5.25% tax prove to be untenable because of concerns about U.S. companies paying little or no tax on their foreign-source earnings, I suggest an alternative approach that would impose a heavier toll on companies that have consistently enjoyed low effective tax rates on their foreign earnings.

Rather than have all corporations pay a flat 5.25% tax on their accumulated earnings held offshore, a corporation with an effective tax rate of 20% or higher on those earnings would be subject to a 3% tax while a corporation that pays little or no foreign taxes would be subject to a tax of 13%.

The Camp proposal would also lower the corporate tax rate to 25%, moving the U.S. much closer to the average corporate tax rate among OECD countries. Camp envisions — and rightly so — paying for the lower corporate tax rate by cutting corporate tax credits and deductions.

While it remains to be seen how lawmakers will find sufficient offsets to pay for implementing a 25% corporate tax rate, that exercise is well worth the effort.

Camp is also to be commended for proposing strengthened “thin cap” rules. The current tax code incentivizes multinational corporations to lower their U.S. tax liabilities by loading-up on debt in the U.S. and generating large interest deductions against their U.S. earnings.

This provision should be expanded to apply to non-U.S. multinationals as doing so would discourage tax-induced foreign acquisitions of U.S. companies. Nonetheless, Camp’s proposed thin cap reform is a healthy and long overdue addition to U.S. tax policy.

Chairman Camp’s proposal for international tax reform is an encouraging step down the long road of comprehensive corporate tax reform.  It shows the chairman and his staff are not afraid of getting rid of what doesn’t work and doing what is necessary to make the United States one of most attractive countries in which to invest and do business.

Galvin is vice chairman of Emerson, a diversified global manufacturing and technology company based in St. Louis, Mo .