The vast majority of poor and middle class income comes from withholdings. So fixing the income tax
system would do nothing to stop the millions of rich people from dodging taxes.
These are two separate issues.
By "fixing the income tax system" I meant a) greatly simplifying it, and b) dealing with some well known loopholes that can't be addressed by mere simplification.
The big advantage to simplifying the tax system is it makes it harder to hide loopholes (as a side effect, it prevents bribing legislators for favorable tax status). Ideally the entire tax code should fit in a 5-10 page document, and a typical individual tax form should be a page or less. This is a huge win from a legal and governmental ethics perspective.
Dealing with certain specific loopholes (such as treating long term income differently from short term income, i.e. capital gains) would address the issue of rich folks dodging taxes. The trick would be to do this in a rational manner, which probably means only taxing when assets are sold (or transferred out of the country).
The new system could (and should) still be progressive (meaning the rich pay more, percentage-wise). We can also still have a withholding component to the system, to help those that benefit most from this (probably most of us!).
I think it's nieve to say that the income tax is the best we can do. Surely we can come up with something better.
The challenge is to come up with a tax that doesn't involve excessive government, excessive bureaucracy, or infringements of fundamental rights. Nothing else is really compatible with the ideal of living in a free country, an ideal that should determine all government. So far, nobody has come up with anything occur than income tax that can do a reasonable job of achieving this (assuming we don't want to tax imports, which would be the other option).