Real and personal property taxes;

              Accounting Research
BULLETINS
Copyright 1941 by American Institute of Accountants
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Issued by the Committee on Accounting Procedure,
American Institute of Accountants, 13 East 41st Street, New York, N. Y.
June 1941
Real and Personal Property Taxes
No. 10
PURPOSES OF THIS STATEMENT
IN of taxes. This has been due in part to the acceptance of a wider view of the legitimate scope of governmental services, in part also to the ex-tended use of taxation for the purpose of effecting social adjustments. There has been an effort to relate tax burdens to a concept not very clearly expressed but often referred to as "ability to pay"; in general it has been assumed that income was more indicative of ability to pay than property. Despite these tendencies ad valorem taxes on property —real or personal—continue to represent a very significant part of this country's tax structure.
Questions of the proper allocation of such taxes as between years have in the past received relatively little consideration. Consistency and assurance that a full year's taxes were brought into the income ac-count of each year were all that was deemed essential. With steadily rising taxes, more careful consideration of the tax liability at any balance-sheet date and of the charge for any income period may be called for.
The argument that tax liabilities should receive recognition in ac-counting at earlier dates than have governed in some cases in the past is strengthened in the minds of some by the fact that taxes themselves, especially federal taxes, have lagged behind governmental expendi-tures. As a result, it may be said that business enterprises are subject to a large but indeterminate future liability which has not been reflected in their accounting statements. In so far as governmental expenditures are being undertaken which must ultimately be met by increased taxation, it seems reasonable that accountants should bear this point in mind, and exert their influence in favor of early and adequate accrual of tax charges, and should encourage the disclosure of taxes as a sepa-rate item in the income statement.
This statement is designed to draw attention to the situation thus outlined and to present some of the considerations which have in the
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