WASHINGTON — The American system for taxing corporations is overly complex and is hurting the country’s global competitiveness, Treasury Secretary Henry Paulson said yesterday.

Mr. Paulson said that two decades after passing the landmark 1986 tax overhaul legislation which cut rates and helped trigger an economic boom, America now has the second-highest corporate tax rates, on average, of any major industrialized democracy.

He said the 1986 overhaul pushed by President Reagan has been undercut in a variety of ways and now the average combined federal-state corporate tax rate stands at 39%, compared to an average of 31% for other major industrialized countries.

“What Reagan referred to as the ‘old jalopy of our tax system’ is clogging the U.S. economy highway yet again,” Mr. Paulson said in an opinion piece appearing in the Wall Street Journal. “The current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness.”

Mr. Paulson said that a conference he will host at the Treasury Department on July 26 will begin a review of American business taxes and the impact they are having on economic growth and job creation in the country.

The conference is coming at a time when a number of Democrats in Congress have put forward legislation that would boost taxes on hedge funds and private equity firms as a way of getting money to fund their initiatives such as protecting middle-class taxpayers from having to pay the Alternative Minimum Tax, which was originally designed to cover only wealthy taxpayers.

Treasury announced that participants at the conference will include three past chairmen of the Council of Economic Advisors under Republican presidents — Alan Greenspan, who was CEA chairman in the Ford administration and later became chairman of the Federal Reserve for 18 years; Martin Feldstein, a Harvard economics professor and CEA chairman in the Reagan administration; and Michael Boskin, CEA chairman in the administration of President Bush’s father and currently an economics professor at Stanford University.

Various corporate executives will participate in the one-day conference including the president of Oracle Corp., Safra Catz; the chairman and chief executive officer of Caterpillar Inc., James Owens, and the head of FedEx Corp., Frederick Smith.

Mr. Paulson in his opinion piece did not make any specific recommendations for ways the tax code should be changed. But he said areas that should be examined include taxes that discourage capital formation, the current tax depreciation system, which does not treat investments uniformly, and targeted tax provisions that add to the complexity of the tax code and contribute to the estimated $40 billion that businesses spend annually on compliance.

“Over the past two decades, while U.S. tax law has grown more complicated and our statutory corporate income tax rate has increased, other nations have been reducing their rates to replicate our miracle,” Mr. Paulson said.