Guess you didn't really read the paper after all ...I read it. Maybe instead of just making baseless claims, you would like to explain how the Flat Tax (or the current system, for that matter) taxes government output.
Labor costs are one of those costs. An $80,000 annual salary costs the producer 80k plus fica. Even though the worker only sees 60k, the full 80k plus fica is a cost that must be covered and hence is in prices.
Help me understand what you don't agree with here.