American businesses are heading for the exits to escape the U.S. tax code. Medical device company Medtronic announced recently that it planned to acquire the Ireland-based firm Covidien and relocate headquarters in Dublin, making it the biggest company yet to leave our shores for a more favorable tax climate. It's just the latest example, and the flight will continue until the U.S. reforms its outdated, uncompetitive tax code.

The basic U.S. corporate tax rate is 39%, the highest on the planet. The average rate among other...