This week’s “Daily Journal” guest columnist is Donna Martinez, associate editor of Carolina Journal.

I feel sorry for the Internal Revenue Service. Like all mega-bureaucracies, it has problems. Big ones.

First, the IRS fails to come close to getting every person who should file and pay taxes, to do so. The U. S. Department of the Treasury’s Office of Tax Policy reports that for tax year 2001, nearly 14 percent of federal taxes that should have been paid, weren’t. Result: $290 billion lost.

The agency can’t even get everyone who’s entitled to a refund to file and collect that cash. Nationally, nearly 1.8 million people owed a refund failed to file a return in 2003, leaving almost $2.2 billion in uncollected refunds sitting with the government. More than 48,000 North Carolinians are on that list.

It’s not the IRS’s fault it’s failing to execute the basics. Non-compliance is what happens when complicated regulations are imposed on a citizenry that knows the rules could, and should, be much simpler. A portion of the population will simply say no to dealing with the hassle—no to hiring a CPA, no to buying tax computation software, no to getting out the calculator and a pencil.

That’s tough to swallow for those who feel compelled to pay because (1) it’s the law and (2) federal taxes fund legitimate government activities such as national security and some public health and safety regulations.

It’s easy to be outraged at the unfairness of the gap between what’s owed and what’s collected and expect the IRS to pursue unpaid taxes with tenacity. In fact, the agency has a plan to do that.

However, in a challenge to conventional wisdom, the libertarian Cato Institute suggests the enforcement approach goes only so far. Writing in “The Tax Gap Mirage” published in March, Cato Senior Fellow Daniel Mitchell argues that lowering rates and reforming the tax code will reap more benefits than additional enforcement efforts.

“Reform” is a popular word these days. North Carolina even has a commission charged with researching the subject—the State and Local Fiscal Modernization Study Commission. Still, I don’t hear enough serious debate among elected officials about our state’s tax system and burden. It is discussed and written about at the John Locke Foundation, where the fundamental goals of fairness and simplicity are considered keys to a thriving, opportunity-rich state.

But unfortunately, discussion of taxes by media and pundits typically focuses on calls for additional revenue, such as the dollars that would accrue to the state with the extension of “temporary” taxes imposed on North Carolinians in 2001.

Some stories are predictably framed around calls to fund unmet needs and reflect a belief that government should be the go-to problem solver for everything that ails us. Others offer the view that modernization of the tax code is synonymous with levying a sales tax on services. As the state looks at these questions, at least one policy analyst is cautioning about what might be ahead, and his concerns are grounded in the definition of modernization.

My definition turns the federal and state income tax collection systems inside out. Income tax withholding from employer payroll checks would be phased out in favor of monthly tax payments made by each taxpayer. When each of us is required to write regular checks to the U.S. Treasury and the N.C. Department of Revenue, we will pay closer attention to the tax rates imposed on our labor and to the programs and services funded with those dollars.

That kind of scrutiny from a well-informed taxpaying public is precisely what some politicians don’t want. They would hear more questions from folks paying the freight, and budget writers would be pressured to set priorities and distinguish between needs and wants. Over time they would make financial decisions like many American families do—very carefully.

That’s reform on which we should all be happy to agree.