Tevez has been suspended by Manchester City as the club look into the events of Tuesday's match against Bayern Munich, when manager Roberto Mancini revealed that he refused to come on as a substitute.
Mancini later stated that Tevez was 'finished' at the Etihad Stadium, although the striker denies the allegation and has received sympathy from some quarters.
Taylor is unhappy with the whole situation and hopes it can be sorted with minimal further damage to any of the involved parties.
"It's not good for Man City, the manager or the player,'' he said in the Daily Telegraph.
"It is not giving the right image across the world. Any conflict is capable of resolving if it's for the best for all parties.
"In the same way you don't want a player humiliated neither do you want the manager undermined.
"It's about trying to achieve that balance with a full apology, a very serious fine and then 100 per cent application by the player, see how it goes for three months and then review the situation in January [when the transfer window reopens].
"Clubs do have that potential to impose a very heavy fine and a warning. That preserves the discipline of the manager. There is a potential for six weeks [fine]. Sometimes a transgression, if substantiated, brings a two-week fine which looks nominal but up to six weeks is not meagre at all."
Taylor is aware of the public anger towards Tevez but believes it would be best to "get everyone around the table" to avoid the possibility of the situation ending in the courts.
He added "Everybody is quick to condemn Tevez , but he's a world-class player. He might not be a favourite with the fans now but he certainly has been last season. When he's pulling his weight, he chases lost causes.
"City paid a lot of money for him, is it necessarily the best thing for him or the club that he is put out to grass? Or to talk about 'stay away from the club'? Or have him playing in the reserves? You can't treat people like that.
"At the moment, I don't see a lot of good of having Tevez out of the game for three months. They have an asset that is going to be declining. It would be cutting off their nose to spite their faces. I am looking to mitigate.
"Rather this than what could be a very protracted legal business of perhaps sacking the player, seeking compensation and not having him at the club - particularly when we have two contrasting views of what happened."