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.