Albany likes to tax bad things, like cigarettes and, maybe soon, soda. But one State Senator’s new idea of a sin tax — on the defaulted sovereign nation of Argentina — would harm the state’s main cash cow, Wall Street.

Argentina defaulted on its debt nearly a decade ago. Since then, it has more or less settled its problems with its bondholders through something called a “debt exchange,” through which bondholders agree to trade in their old bonds to the defaulted borrower for new ones, often taking a loss.

But New York seems to think Argentina’s bondholders can’t stick up for themselves. As the Post‘s Josh Kosman reports today, Sen. Brian Foley, a Democrat of Suffolk County, has proposed a budget item that would slap a new tax on the in-state financial transactions that such debt-exchanges create, raising $450 million over five years.

Foley argues that when Argentina failed to pay up on court judgments related to its default, investors lost money, causing the state’s tax collectors to lose money, too.

But it is not the place of the New York taxman to insert itself into global disputes between sophisticated borrowers and creditors. These cross-border disputes are complex, and a myriad of courts and regulatory bodies exist at home and abroad exist to deal with them. Courts can place holds on assets, for example, to deal with legitimate unpaid claims, while global debt underwriters could refuse to do business with Argentina in the future (as they generally have, spurring Argentina to negotiate the exchanges in the first place).

Investors in emerging-market sovereign debt are big kids, and know that their money is at risk, including political risk (supposedly in Argentina, not New York). That’s why investors demand a higher return than they do for investing, say, in Treasury debt.

By inserting the taxman on such a granular level into individual financial transactions, Foley’s measure would risk sending yet more of the important business of debt trading overseas, particularly to London.

New York banks, underwriters, and agents should feel free to trade all kinds of debt without subjecting their transactions to an Albany revenue-raising measure that comes in the guise of moral enforcement.

Anyway, it takes chutzpah for New York to sermonize against a government entity that borrowed so much that it couldn’t or wouldn’t pay it back.