Argument against Tax Bailouts Essay Example | Topics and Well Written Essays - 2000 words

Argument against Tax Bailouts - strain ExampleAdvantages to be discussed be bailouts be needed to ensure that big flocks whose twig leave behind concern several industries rouse survive bailouts are a necessary frugal stimulant to jump-start the sapless economy Bailouts are essentially regime loans which the corporation receiving must pay back hence, the specie willing be returned Disadvantages to be discussed are bailouts use taskpayer money, which diverts much needed funding from other g all overnment programs and institutions bailouts are band-aid solutions as they deal with the symptoms, not the main problems and do not always work bailouts are against the drop out market principals and promote an environment where big corporations advise take reckless risk knowing the government will pull them out. Despite the perceived advantages, tax bailouts are a major cost to tax payers and should not be used as a solution to prevent corporations who have placed themselves i n difficult positions through mismanagement. As of July 24, 2011, the United States government has handed out tax bailouts totaling well over $2.5 trillion with a commitment to provide further support of $12.2 trillion (The New York Times). These funds potentiometer be directed to improve the governments social services and infrastructure. However, large corporations, who are at the brink bankruptcy due to mismanagement and high risk taking, will end up receiving these funds. However, some(a) would argue that these bailouts are necessity in order to prevent limit the ripple effect from the collapse of big corporation. Bailouts are needed to ensure that big corporations whose collapse will impact several industries can survive. These too big to fail corporations, if they were to collapse the, system would not be able to hold up against such a significant jump in unemployment numbers. Given the cross-functional nature of corporations today, the impact would have been tangle in other industries job losses would mean a drop in consumer spending, which would impact the retail industry (as an example) and so on. In order to prevent such a ripple effect, bailouts are necessary. Bailouts are a necessary economic stimulant to jump-start the shaky economy. By implementing a bailout, government can prevent loss of jobs, which means that consumers will continue to have disposable income to spend. This will boost the industries that reach the goods and services thus stimulating the economy and keep it steady. Consumers without any source that provides them with disposable income, example jobs, will hold back the spending. This will cause lower retail expenditures thus resulting in slow economic growth, which can lead to a recession. Thus, to prevent such dangerous movements, the bailout is required. Bailouts are essentially government loans, which the corporation receiving must pay back hence, the money will be returned. The government has the upper hand in dictating th e conditions upon which the bailout is issued. In the case of the automakers, governments, in exchange for the bailout, received an ownership stake in the company, for example public Motors, thus will receive dividends and interest once GM starts generating revenue. Part of the deal with the big corporations is that the bailout money has to be returned once the crisis has been averted and