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Let’s say hypothetically that you are involved with 10-20 “transactions” daily. Then instead of paying a 1% tax you have now just paid a 10-20% tax. do you see how easily this can snowball?

No. Whether you spend your day's pay in one big transaction or a dozen little ones your tax is the same.

Now the problem is that you'll get hit for 1% when you are paid (it is a transaction). If you get a check, you'll pay an extra percent when you cash or deposit it (better ask your boss for cash). Next if you did deposit it you'll get nicked for another percent when you pull the money out to buy something or when you put it on a credit card ... and then another percent to pay the credit card bill.

Those few percent for a "1% tax" are just the start. Each business will have to pay 1% on every transaction all the way through the chain of production. This will give a huge incentive to companies to vertically integrate. Imagine two car companies. One contracts out everything other than the final assembly. They end up paying 1% to the iron miner, 1% to the steel maker, 1% to the company rolling the steel ingots into sheets, 1% to the company stamping out parts, etc. etc. Compare that to another company which merges the iron mines, steel plants, parts plants, oil drillers and refiners (for plastics), electronic manufacturers, dealerships, etc. None of the transactions between these divisions are taxable since they are just entries in the accounting books. The verically integrated company will be at a huge advantage. More likely to avoid all of this all the manufacturing will just be moved off-shore so companies don't have to mess around with a US transaction tax and only the final sale will be a US transaction for 1%.

Next, this will put a crimp in the number of transactions. People will start dealing with cash to avoid depositing, withdrawing and moving money around to minimize taxes. Pull $300 billion out of the banks (only $1000 per person, which might be a lowball estimate) and you will remove trillions of dollars from the system because of the multiplier effect of our fractional reserve system - much like our current recession where banks are less willing to lend thus destroying many times that lending shortfall.

I can think of few taxes as bad as the transaction tax. Even a VAT would be far less destructive. Hell, even our current monstrosity of a tax code is better than a transaction tax.