Taxing bad things is the fiscal equivalent of the Holy Grail. So, as taxes go, the levy on bank liabilities is quite a good one. By punishing bad behavior — the excess reliance on short-term hot money — it will hopefully encourage better behavior. But to make this tax really good, it needs to be rejigged.

First, the United States needs to be less arrogant if it wants this tax to fly internationally. The Obama administration wants other countries to copy it. After all, a level playing field would stop the U.S. banking industry from being hobbled relative to foreign centers.

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