(FORTUNE Magazine) – A simple flat tax is still the rage at the top of corporate America. In a new FORTUNE poll, 66% of some 200 CEOs picked a 17% flat tax over such radical reform alternatives as a national sales tax, a value-added tax, and the so-called USA Tax proposed by Senators Sam Nunn and Pete Domenici.

But while the CEOs say yeah, their tax counsels say whoa. "All this euphoria and rah-rah is the wrong way to go," warns Peter Merrill, a partner at Price Waterhouse. "When companies run the numbers, many will be in for a rude awakening."

One who's smelling the coffee is Doug Miller, president and CEO of Norrell, a big temporary-service company. Miller estimates that Norrell's flat-tax bill would jump 60%, partly because employee benefits would no longer be deductible. "We were staggered," he says.

Many research-intensive industries, such as software and pharmaceuticals, would lose their R&D credit. Says Arthur Andersen's Andre Fogarasi, managing director of federal tax services: "Many will simply move to India."

John Loffredo, Chrysler's tax counsel, worries that by simultaneously eliminating deductions for interest, benefits, and foreign taxes, a flat tax would encourage companies to manufacture in Mexico or Canada, where they would get those deductions, then export to the U.S. at a more favorable rate. Says Loffredo: "This is runaway-plant heaven."

Then there are the grisly issues of transition. In a flat-tax system, in which capital investments are expensed, what do you do about some $425 billion in unused depreciation? Says reform advocate Lawrence Hunter, president of the Business Leadership Council: "What you don't want is for the tax-reform euphoria to cloud our judgment. We could find ourselves in a situation like the Democrats experienced on health care reform, where everyone responded positively, but when the details came out there was great disillusionment." In other words, be careful what you wish for.

--Ann Reilly Dowd