1 Nov 2010

How to save the world economy

So, here's an interesting idea to be starting with. It's an idea that I have been working on for a couple of months and which I have finally got around to writing down in a paper entitled "A Flat Rate Financial Transaction Tax to replace all taxes". I submitted it to a public archive on the 27th of October 2010, with a revised version on the 29th.

I would be really happy if as many people as possible read it and gave me their feedback. You can access it here.

The idea is really simple, and I have a great deal of difficulty in believing that no-one has thought of it before. Essentially, it is based on the observation that if you take all the financial transactions for 13 major economies, you get a mind blowing total of $9000 trillion dollars (that's $ 9000 000 000 000 000). If you add up all the tax revenues for the same 13 countries, you get $9 trillion. That's 1000 times less. This means that if you imposed a 1% flat rate transaction tax, you would get 10 times more government revenue that they currently obtain. I seriously think that the vast majority of citizens would vote for a scheme in which all taxes (income tax, VAT and sales taxes, and even taxes on profits) are abolished and replaced by a simple to implement 1% fee on all transactions.

I'm in the US right now giving talks at MIT, Dartmouth College and then San Diego. When I arrived at Boston airport I wanted to draw out $200 in cash, I was charged $4 (2%). While I would have no objection to paying a 2% charge if the money was used to finance Barack Obama's healthcare plans (for example), I object most strongly to some banker putting my money in his pocket for a zero risk operation like running an ATM. Clearly, we are all used to paying far more than 1% for transactions, so we probably wouldn't even notice.

So, do read the details, and let me know what you think.

1 comment:

  1. I completely agree with what you have said, I still don't understand why It has not been done before. Governments would get more revenues and would not have to rely on people's money. It makes me sick to see that bankers and traders are always winning...

    By the way, English is not my first language, so I hope you will understand my post.