The taxi has to drive around between fares, increasing congestion for no benefits to the wider economy.
Also, so far taxis are still all driven by humans. The economy only has a fixed number of humans and needs to allocate them to the most worthwhile things. Having two humans (driver and customer) in a vehicle travelling to a place costs society more than having just one person doing the driving.
Compared to 100 cars to 100 people.
Can you imagine what London would be like tomorrow if everyone suddenly took their car to work? It'd be completely intractable. Nobody would even get near the city centre.
The only difference is the amount of parking needed.
Had the city been built for that (ie. A few floors of underground parking under every building) it would be fine. Some cities in Poland do this. Clearly retrofitting that isn't practical.
Have you actually thought this through?
For example - 6,000 people work at the Gerkin.
Can you guess what area is needed to park 6,000 cars? How many underground levels you'd need? How long would it take cars to filter in at the start of the day and filter out at the end? How much road space you'd need for everyone to get to the building in the first place?
It's 90,000 m^2. That's about 90 underground levels you're building there, or digging twice as deep as the building is high.
Your idea is insane.
In dense areas we need everyone going by space efficient transport (walking, tubes or buses if they are full, maybe bikes)
Yeah I know that I'm not advocating for anyone taking any kind of car...
...but if they're going to take a car we'd prefer it was a taxi not a private car. So a higher proportion of taxis over private cars is a good thing (as long as total number stays the same.)