More importantly, this whole thing (admittedly, flat tax would do this too) would destroy an industry that has allowed alot of hard working people to become rich.
I don't think the flat tax would hurt housing as much as the sales tax. The mortgage exemption is an overstated benefit. It only has a marginal effect once you factor in you could have taken the standard deduction anyways. Another negative thing about the Sales Tax is it actually charges a tax on interest. I believe it charges 30% on the amount of interest that is above the fed or prime rate.
Are you referring to tax accountants and lawyers and such? If so, read up on "deadweight loss". Spending billions of dollars complying with income taxes is no more useful than spending billions of dollars paying people to dig holes and fill them again. It ultimately produces nothing and is a net loss even if some come out ahead.