I agree with you guys they need to be considered but they also need to be discounted appropriately. If I know a company does not have to pay taxes for the next 5 years than they deserve a valuation greater than an otherwise equal company paying taxes today.
Those higher earnings can be reinvested in the business for a number of years or distributed to taxpayers which is by no means a trivial matter in a world where corporate tax rates are in excess of 30%. In fact I would argue that for companies with many years of no tax liability that the discount should be almost nill because the present value of those taxes many years down the road is very small.
Abv and researcher.. I read again your post about the tax issue and I agree to your posts (and it seems the message of my post is similar if not exactly the same...
we're all in the same page....
gilead.. I'm not sure what you mean by the discount should be n... are you saying that we should ignore the impact of the tax (assume they will never have to pay tax)? or we should ignore the impact of the tax benefit? (and assume if they have no tax benefit at all)
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