Campaign contributions by high-frequency trading firms have skyrocketed 673 percent since 2008, according to a new report focusing on 48 companies. These traders contributed $16.1 million during the 2012 election cycle, up from just $2.1 million in 2008. That’s not including the 93 percent spike in funds spent on lobbying Congress, the Securities and Exchange Commission, and the Commodity Futures Trading Commission since the recession.

The biggest single-year jump in spending occurred between 2009 and 2010, as traders attempted to kill the beefed up regulations in the Dodd-Frank Wall Street Reform Act. While the law cracked down on risky trading by banks, it only mentioned high-frequency trading once, and left hedge funds and trading firms largely unregulated.

The report details how high-speed traders successfully ducked the bulk of Dodd-Frank’s regulations after the financial crisis:

“Unsurprisingly, high frequency traders upped their campaign contributions and lobbying spending at the same time Congress was debating a new law to crack down on the excesses of Wall Street,” said CREW Executive Director Melanie Sloan. “Despite all of the new regulations put forth in Dodd-Frank, these firms managed to come away unscathed. If lobbying and campaign contributions don’t directly buy influence in Washington, they certainly don’t hurt.”

Unregulated high-speed trading, which prioritizes quick profits without the burden of investment, renders the market extremely volatile and subject to major fluctuations. So-called “flash crashes,” like the Dow’s 1,000-point plunge in 2010 caused by an automated high-speed trading program, expose the risk these trades pose to the entire economy. Despite the lack of greater economic benefit, high-frequency trading has come to dominate the stock market since the financial crisis.

In response to the 2010 flash crash, the SEC approved a plan to limit high-speed trading in the event of major price swings. The agency is planning to further tighten regulations on the industry, while lawmakers may also consider a financial transactions tax to make such trades more costly.

Minnesota Rep. Keith Ellison (D), a member of the Congressional Progressive Caucus, will today introduce legislation that would institute a tax on financial transactions, an effort to raise needed revenue while also limiting risky high-speed trading that has increased volatility in financial markets.

Ellison’s legislation, The Inclusive Prosperity Act, would levy a 0.5 percent tax on stock trades, a 0.1 percent tax on bond trades, and a 0.005 percent tax on trades of derivatives and other investments. Three Democrats — Rep. Peter DeFazio (OR) and Sens. Tom Harkin (IA) and Sheldon Whitehouse (RI) — introduced similar legislation earlier this year that would institute a 0.03 percent tax on all financial trades. That proposal would raise $352 billion over the next decade; Ellison’s seeks to raise roughly $350 billion annually.

“This is a small tax on financial transactions that will allow us to meet the needs of our nation,” Ellison said at the press conference. “And didn’t America step up, on very short notice, for Wall Street when it needed help? Well now the American people need help.”

Such a tax would slow down financial markets that have increased in both speed and volatility thanks to high-frequency trading, which allows firms to use algorithms to make thousands of trades per second. Opponents of a transactions tax argue that it would slow down economic activity and growth, but those claims are hardly proven: the U.S. had a transactions tax after World War II, when it experienced its largest period of growth. While most industry groups oppose the tax, some former financial leaders have come out in favor. “A modest financial transaction tax of less than 1 percent would serve as a remarkably efficient tool to achieve needed reform,” John Fullerton, a former director at JP Morgan Chase, wrote in 2011.

“We need to have more thoughtful trades, not just trades, trades, trades for their own sake,” Ellison said.

Eleven European countries are planning to implement a transactions tax, and Labour members in Britain have considered expanding its transactions tax, which exempts derivatives and swaps. “I don’t see any evidence that there would be a negative effect on economic growth,” Labour MP Chris Leslie told ThinkProgress in February. “In fact, quite the opposite.”

“This will allow us to invest in things that really matter,” Ellison said. “Education. Roads. Health care for our seniors.”

Financial firms that specialize in risky high-speed trading are boosting their lobbying efforts against proposals to rein in the practice, a Wall Street Journal analysis of lobbying records found. Three Democratic lawmakers introduced legislation that would institute a small tax, known as a financial transactions tax, on high-frequency trades, which reap major profits for firms but add volatility to financial markets.

In response, high-speed trading firms have more than doubled their lobbying efforts, the Journal found:

That follows a steep increase in registered lobbying by high-speed trading firms. Such spending averaged $2.3 million in 2011 and 2012, more than double the average from 2008 to 2010, according to an analysis by The Wall Street Journal of data compiled by OpenSecrets.org, part of the Center for Responsive Politics.

Eleven European countries recently adopted a financial transactions tax; the United Kingdom already has a limited version of the tax that Labour Party lawmakers have looked into expanding. Sens. Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI) and Rep. Peter DeFazio (D-OR) in February reintroduced their plan to levy a 0.03 percent tax, which they say will raise $352 billion over the next decade, on high-speed trades. Such taxes aim to curb the explosion in high-frequency trading that has only grown since the financial crisis, as this chart from market analyst Nanex shows:

The financial industry argues that such a tax would limit growth potential, but as DeFazio told ThinkProgress last year, the U.S. had a financial transactions tax after World War II when it experienced its greatest period of economic growth. Many business leaders support the tax, including high-speed trading’s pioneer, who said last year that the growth in that trading “has absolutely no social value.”

The Congressional Progressive Caucus introduced a budget this week that it says would bring total deficit reduction to $4.4 trillion through defense cuts, new revenues, and economic growth that would result from measures to boost the economy and education. It includes a substantial amount of revenue through the closure of tax loopholes and new taxes on risky financial trading while also preserving Medicare, Medicaid, and Social Security from cuts.

Under the budget, defense spending would return to 2006 levels, investment income would be taxed as wage income, and tax rates would rise on millionaires and billionaires. The highlights of the budget include:

A financial transactions tax: Such a tax, as introduced by Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA), would raise $352 billion in revenue over the next decade while also reducing risky high-speed trading among Wall Street banks. Eleven European countries have announced that they would adopt such a tax, and it has been supported by consumer groups and financial and business leaders.

Stimulus measures: In an effort to boost the economic recovery, the Progressive budget would fund infrastructure investments and provide aid to states to allow for the rehiring of police officers, teachers, and firefighters. It also includes funding for job training initiatives, extended unemployment insurance (which has been cut at the state level), a tax credit for working families, and money to rebuild schools, which are facing a half-trillion deficit in construction and improvement needs.

Closure of corporate tax loopholes: According to the budget, it would raise more than $200 billion in revenue from the closure of tax loopholes and elimination of tax breaks, including those for gas and oil companies, one that benefits wealthy Wall Street traders, and one that gives corporations a break for moving jobs overseas.

The budget also includes a carbon tax to increase funding for alternative energy methods and a public option to lower the cost of health care. It would also give the government the power to negotiate drug prices to generate more in health care savings.

A trio of Democratic lawmakers today introduced legislation to institute a small tax on financial transactions, a proposal that would reduce volatility in financial markets and raise substantial revenue for the federal government. Under the plan from Sens. Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI) and Rep. Peter DeFazio (D-OR), financial trades would be subject to a 0.03 percent tax, which they say would raise approximately $352 billion in revenue over the next decade.

Such a tax would slow down high-frequency trading that poses a threat to the health of financial markets while also incentivizing investment that drives economic growth. Opponents argue that the tax would slow down growth, but DeFazio told ThinkProgress last year that those claims are unfounded. “For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”

“This commonsense proposal will raise billions in new revenue to get rid of the sequester or reduce the deficit while also discouraging the kind of reckless high-volume trading that contributed to the financial crash in 2008,” Whitehouse said.

11 European countries recently announced that they will institute a financial transactions tax, and Britain, which taxes stock and bond trades but does not tax more complex trades involving derivatives and swaps, is open to expanding its tax as well, Labour Party MP Chris Leslie said last week. “I don’t see any evidence that there would be a negative effect on economic growth,” Leslie said. “In fact, quite the opposite.”

Harkin and DeFazio have introduced the transactions tax in the past, but it has not received support from Treasury or President Obama. Many consumer groups and business and financial leaders, however, have offered support for the tax. “A modest financial transaction tax of less than 1 percent would serve as a remarkably efficient tool to achieve needed reform,” John Fullerton, a former director at JP Morgan Chase, wrote in 2011.

There is no evidence that a financial transactions tax, if instituted by the world’s largest financial centers at a modest rate, would have a negative impact on economic growth, according to Christopher Leslie, a member of the British Parliament. That such a tax would limit growth and investment is a common claim of its detractors, but the effect would actually be “quite the opposite” if instituted smartly, Leslie said after an event about the institution of a transactions tax at the Center for American Progress:

LESLIE: I don’t see any evidence that there would be a negative effect on economic growth. In fact, quite the opposite. I think if you did have a global financial transactions tax where all of the global financial centers were involved and it was also set at a rate that is pretty modest, it wasn’t going to have a distorting negative consequence, then you could raise revenues that would actually help promote growth and invest in job creation. And I think ultimately that’s one of the main arguments in favor of a financial transactions tax.

Watch it:

The United Kingdom already taxes stock, equity, and bond trades at a small rate, but it does not tax derivatives and swaps. Leslie said that the British Labour Party, of which he is a member, is interested in expanding the tax to derivatives and swaps but only if the United States does so as well. Eleven European countries announced plans to institute a financial transactions tax in January.

A plan introduced in Congress by Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) would tax derivatives, stocks, and bond trades at a 0.03 percent rate, raising roughly $350 billion over the next decade. A plan outlined by the Center for American Progress’ Adam Hersh and Jennifer Erickson today would raise $50 billion a year through similarly modest rates. The tax would also add stability to financial markets while promoting investment that is better for growth and the economy, Hersh and Erickson argued.

Such a tax has been supported by business and financial leaders, including a high-frequency trading pioneer who has admitted that such trading, which would be greatly limited by a transactions tax, has “absolutely no social value.”

A duo of Democratic lawmakers have spent the years since the financial crisis calling for a financial transactions tax, a small fee on individual trades that would slow down markets and make them safer for investors and the country as a whole. Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) introduced legislation that would institute the financial transactions tax again this year, after 11 European countries announced that they would adopt such a tax.

The Center for American Progress’ Adam Hersh and Jennifer Erickson published a new paper today outlining five reasons why the United States should move to adopt one immediately:

1. It would bring in revenue. Even a small financial transactions tax would bring in substantial amounts of revenue. Taxing stock trades at 0.117 percent, bonds at 0.002 percent, and derivatives and swaps at 0.005 percent would raise $50 billion a year, according to Hersh and Erickson. That’s enough to cover the costs of veteran’s health benefits, or enough to cover more than half of sequestration.

2. It stabilizes financial markets. The explosion of high-frequency trading, in which trades are made by computer algorithms by the millisecond, has made markets more volatile. Even the creator of high-frequency trading has said it has “absolutely no social value.” A financial transactions tax would disincentivize such trading by charging a fee on each trade, quickly making it unprofitable and stabilizing financial markets.

3. It incentivizes investment that drives growth. The tax would make investors more likely to hold their investments in stock portfolios for longer periods of time, creating a longer-term outlook on stocks that would translate into “more investment, more jobs, and higher productivity in the real economy—all of which drives growth,” Hersh and Erickson write. “A tax on financial trading will shift behavior toward investment for the long term, which is better for financing businesses and for stable sustained economic growth.”

4. Other countries already have it. Last month, 11 European Union countries, including Germany and France, announced that they would institute a financial transactions tax, bringing the global total to 23 countries. That mitigates that argument opponents make that such a tax would make American markets less competitive.

5. Business leaders support it. As Hersh and Erickson note, the tax is supported by economists, business leaders, and veterans of the financial industry. Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman have both endorsed it, as have mutual-fund titan John Bogle and John Fullerton, a former director at JP Morgan Chase. “A modest financial transaction tax of less than 1 percent would serve as a remarkably efficient tool to achieve needed reform,” Fullerton wrote in 2011.

The European Union is working on rolling out a financial transactions tax, a tiny tax on stock trades. The benefits of such a tax are substantial: it can raise significant amounts of revenue without bothering most investors and it can slow down the high-frequency trading that has brought huge amounts of volatility into markets.

Some Democratic lawmakers have been making a push to implement a transactions tax here. But in an email to the Wall Street Journal, the Treasury Department had nothing but harsh words for Europe’s effort:

The U.S. Treasury said it opposes plans by 11 European Union countries to impose a small tax on trades in shares, bonds and derivatives. [...]

The potentially broad impact has triggered opposition in the U.S. “We do not support the proposed European financial transaction tax, because it would harm U.S. investors in the U.S. and elsewhere who have purchased affected securities,” a Treasury spokeswoman said in an email. “Treasury has raised these concerns with European counterparts.”

Treasury has never had much love for a transactions tax, but this outright denunciation is a missed opportunity. Instead of dumping on the tax, Treasury could have seized the chance to say that, if the developed world gets together on a transactions tax, many of the concerns about it undermining an individual nation’s competitiveness will disappear.

As Reuters’ Felix Salmon noted, “financial transactions taxes work pretty well: even the UK, which is implacably opposed to the European tax and which won’t ever join such a scheme, levies a surprisingly large 0.5% tax whenever anybody — anywhere in the world — trades a UK stock. And yet, somehow, London remains the first choice for international companies looking for a place to list their shares.”

There is little reason to expect that the U.S. experience would be substantially different, as New York would still have all the attraction for the financial industry that it does today, even with a transactions tax. And most investors would barely notice the miniscule tax, as they don’t engage in enough trading to rack up a substantial bill. In the meantime, the U.S. would raise revenue from a sector that can afford it, with little economic effect.

Democrats were unsuccessful in their push for a financial transactions tax after the 2008 financial crisis, but after 11 Eurozone countries received approval to institute such a tax Tuesday, two lawmakers are planning to try again. Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA) will reintroduce their proposal, which would raise an estimated $352 billion over the next decade by instituting a 0.03 percent tax on financial trades.

A financial transactions tax would slow down high-frequency trading, which has exploded in the last five years. Such trading “has absolutely no social value,” according to one of its pioneers, and only increases volatility in the market. The tax would have little effect on normal traders.

Critics of the Euro-wide turn to a transactions tax say it could slow down growth and encourage businesses to move elsewhere, and similar claims have been made about the American version. But 52 financial executives endorsed the tax last year, and DeFazio told ThinkProgress last year that such claims are false.

“For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”

11 members of the Eurozone today received the go-ahead to apply a financial transactions tax to trades of stocks and derivatives that occur within their countries. The EU’s tax commissioner called it “a milestone for EU tax policy“:

EU ministers have given the go ahead for 11 eurozone members, including France and Germany, to prepare a new financial transactions tax. [...]

The tax – also known as a Tobin tax after the economist who originally came up with it 40 years ago – is expected to be charged at a rate of 0.1% of the value of any trade in shares or bonds, and 0.01% of any financial derivative contract.

Although the tax is not being adopted by the UK, which already charges its own 0.5% stamp duty on trading in shares, it will nonetheless have to be paid by investors trading on the London Stock Exchange who are based in one of the 11 countries.

The other nine going ahead with the tax are Spain, Portugal, Italy, Belgium, Austria, Slovakia, Slovenia, Greece and Estonia.

As former Labor Secretary Robert Reich tweeted, “Most of Europe will now tax financial transactions, generating billions for hard-pressed budgets. U.S. should do same.” It’s unclear how much revenue Europe will raise, but the European Commission “had previously estimated that such a tax across the 27-nation bloc could yield €57 billion a year,” while “the 11 nations pushing ahead represent about two-thirds of the EU’s economy.”

Here in the U.S., lawmakers have unsuccessfully tried to implement a financial transactions tax in the aftermath of the 2008 financial crisis. The benefits of such a tax are two-fold. First, it would raise billions of dollars to repair a federal budget that expanded in the wake of a recession caused in large part by Wall Street malfeasance, thus making the financial sector repay for the damage it caused. Second, it would slow down some of the high-frequency trading that has exploded in recent years, bringing more stability and safety to financial markets.

Last year, a group of 52 financial executives, including several former heads of mega-banks JP Morgan and Goldman Sachs, endorsed the idea. Forty countries around the world have already embraced a transactions tax.