The Steady-State Hypothesis in the Theory of Accounting for Income Taxes

Purpose. The study aims to formulate and substantiate the Davidson–Voss steady-state hypothesis. The origins and specific features of the underlying problem are examined, including an analysis of S. Davidson’s examples illustrating a static firm and a growing firm. The study explains why other researchers have been unable to establish a relationship between deferred taxes and cash flows. Scientific novelty. The novelty of the study lies in the fact that the steady-state problem is considered for the first time in the form of a hypothesis that applies primarily to medium-sized and large companies and only to their tax accruals. This constitutes the study’s key finding. On the one hand, cash flows related to income taxes are partially explained by tax accruals and firm size; on the other hand, the influence of other external factors remains undisclosed, providing a direction for future research. Practical implications. The findings discussed at the 16th International Research and Practice Conference, December Readings in Memory of S.B. Barngolts, held on 12–13 December 2024, may be used in normative research in the theory of accounting for income taxes and in developing methodologies for analysing the tax position of organisations.