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Google Predicting Higher Future Taxes?

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It would appear that way. A look at their FY07 financials indicate that they are trying to pay down their taxes now. Any good tax adviser would recommend paying off taxes early only in the case that tax rates will rise. Otherwise, it is best to defer taxes because of inflation, which cause dollars in the future to be worth less.

From Google’s form 10-K, filed February 15th, we find the following information:

Current:

2005

2006

2007

Federal

$ 506,322

$ 812,280

$ 1,288,310

State

141,101

191,266

294,935

Foreign

7,694

28,516

51,227

Total Current

655,117

1,032,062

1,634,472

Deferred:

Federal

14,273

(80,073)

(135,047)

State

6,890

(18,395)

(29,165)

Total Deferred

21,163

(98,468)

(164,212)

Provision for income taxes

676,280

933,594

1,470,260

The negative deferred taxes is normally an odd thing to see. In this situation, it leads me to believe Google is predicting a Democrat victory and an increased corporate tax rate. In light of a President with a historically-low approval rating, a switch of parties in office is a real possibility. Also, with the Republican candidate looking to continue the current tax policy, Google is only losing possible gains via interest and inflation as opportunity costs.

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Written by walonline

April 24, 2008 at 1:08 pm

Posted in Markets, Regulation

Tagged with , , ,

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