I suppose it doesn't. However, that is not the nature of any flat tax proposal I've ever heard. For example, according to FairTax.org for 2009 they propose that a single adult with no children receive an exemption of $10830 (and double that for a couple). With children you get more, but a couple with 7 children would receive only $47840 rather than the $100k you suggest.
Furthermore, the fair tax people say the rate would be 23%. However they're not using this rate the same way sales taxes currently apply. The rate means that 23% of the total cost of the item would be tax. Lets give an example of how this is different. If you buy a tube of toothpaste for a dollar, if any state had their sales tax rate at 23% you'd pay $1.23 for the toothpaste. However the way the fairtax.org people define the rate 23% of the final price goes to tax. This means that you would have to pay $1.30, 23% of which is $0.30 (leaving $1 for the merchant).
In other words, the rate is actually 30% the way everyone in the country currently understands consumption taxes to be applied. And it is far from certain that even 30% would be sufficient, they're making very rosy assumptions to make their plan appear as feasible as possible.
Now maybe you have some other flat tax scheme involved, but I'm skeptical that 2/3rds of the fairtax proposal with a much larger exemption could be revenue neutral, especially when the fairtax proposal itself probably isn't setting the rate high enough.