The Tax Lawyer's Blog

I hate cliches and “too big to fail” has become one of the more annoying ones. 

The phrase is used to describe any company or group of companies that so dominate their industries that their collapse would be more costly to the American economy than their bailout by the taxpayers. AIG and General Motors, for instance.

But make no mistake about it, the cliche wasn’t mindlessly conjured. Those using it deeply believe that the federal government should do more to tax and regulate corporations. In other words, they don’t trust the free market. 

“Too big to fail,”  then, is pejorative fashioned by anti-capitalist, pro-nation-state left wingers as a propaganda tool to promote more government intrusion in the free market.

It makes sense, too, for if a corporation is considered too big too fail, making it smaller and less powerful is the only obvious solution to the problem. And how does the government make a corporation smaller? Through increased taxation and heightened regulation, things that also just happen to make the government bigger and more powerful.

So it’s not surprising that it was fiscal conservatives who opposed the bailout of the AIG’s and GM’s of the world. They did so because they believe that the collapse of these companies would have represented the collective will of the free market and that the collective will of the free market should never be artificially subverted by government intrusion.

Ironically, although the left does not trust large private corporations, it implicitly trusts the federal government, the only entity that truly is too big to fail. It fails regularly and continuously has to borrow money and raises taxes in order to bail itself out.

A tax increase, then, is nothing less than the federal government’s bailout of itself.

Bookmark & Share: