1) Compliance costs somewhere between US$350 and US$500 BILLION per year.
2) American citizens and businesses sending US$15 TRILLION in liquid assets out of the US financial system either by participating in the underground economy or using tax loopholes to put the assets in offshore financial centers (care to explain all those "banks" in the Caribbean?) to keep them out of the reach of the IRS.
3) No incentive to save and invest since both personal savings and capital investments are subject to income tax.
4) American companies moving jobs beyond US borders for income tax reduction reasons.
This, in my opinion, is flat-out economic stupidity. With FairTax in place and the 16th Amendment repealed, we'll end all the problems noted above and get over US$20 TRILLION in repatriated liquid assets and new investment from foreigners eager to take advantage to the USA being the world's largest legal tax haven, kicking off an economic boom that would make the boom of the 1980's and the 2002-2006 boom seem like a minor event.
Actually, you wouldn’t. In particular, repeal of the 16th Amendment wouldn’t accomplish anything other than, quite possibly, simply exempting property-owners from income tax on their capital gains when realized.
Folks who focus on repeal of the 16th Amendment need to read the Income Tax Cases - Pollock v. Farmer’s Loan & Trust Co. - a little more carefully. Those Supreme Court cases, from 1895, did hold an earlier income tax to be unconstitutional - but only as it applied to the capital gains of property-owners when they sold their property.
In particular, the Supreme Court expressly considered the application of that earlier income tax to wages and other compensation for services, decided that such a tax would be nothing more than a valid excise tax, and therefore constitutional. In the Income Tax cases themselves, this part of the tax didn’t survive because the Supreme Court decided that severing only the unconstitutional parts - i.e., the tax as it applied to capital gains - would have left a law that perverted the intent of Congress when it enacted the law in the first place, so it simply voided the entire law.
The 16th Amendment was expressly drafted and designed to overrule the Supreme Court’s decision in the Income Tax Cases. Thus, repealing it would simply put us back to the situation that existed immediately after those cases were decided, namely: repeal of only the capital gains tax portion of the income tax - an income tax on payments for services rendered - wages - would still be perfectly constitutional and I, for one, would bet my bottom dollar that Congress would not have such a delicate concern for the citizens of this country that it would repeal the rest of the income tax because it was unfair. Instead, there would be more shrieking from the harpies on the left than we’ve ever heard - to the point that a lot of bankers and other people who “look rich” to the idiot left would probably be assaulted and murdered, and we would end up with some draconian federal tax on property, e.g., a transactions tax on every transfer of property, along with rules that impose a constructive transfer at the end of each year (which would effectively mimic the mark-to-market rules that apply to certain financial businesses right now).
No, as tempting as it may sound (and I do not disagree with the spirit of the idea - that the only way to truly rein in the federal government is to restrict its access to our money), repeal of the 16th Amendment will not do much, if anything, to staunch the flow of dollars into the Congressional feeding trough.