Except that HFT software have "algorithms" implemented within them that are meant to cause market manipulations, not just the automation of buying/selling (for humans making strategic or tactical decisions). The developers often aren't sure exactly what the outcome will be (since they can't control the other actors). So it devolves into high-stakes Core Wars (http://en.wikipedia.org/wiki/Core_War
), and the rest of the investment market has to deal with the reconstruction costs.http://www.theatlantic.com/technology/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829/
The software is certainly trying to do something
, just no one outside of the quants knows what (and they're not talking, aside from saying that they're never sure exactly what will happen).
This is very different from making purchases by using options to catch the values as they move about during the day (for long-term holding), instead, they're (apparently) trying to utilize the noise of intra-day (or intra-second) trading to make infinitesimal amounts on each trade, which can be aggregated together for actual significant returns. As such, some of these can end up in positive feedback loops off of each other, whipsawing a stock around. I've seen some people liken it to a major market crash and recovery in less than a second.
A tax on HFTing would price them out of the HF market, and move the software back to trade automation. Or, it would just drive up the size of the market disturbances that they are trying to create and benefit from (to keep them profitable).