How Does Tax Regulation Affect Accounting Firms’ Demand for U.S. Tax Accountants: Evidence from the TCJA

• In Event: Tax Complexity and Tax Design

Abstract

In this study, I exploit the passage of the Tax Cuts and Job Act (TCJA) in December
of 2017 to investigate how the new regulation influenced public accounting firms’ demand for
tax human capital in the United States. Using a dataset of online job postings made by
accounting firms, I document a significantly greater number of tax job postings after the passage
of the TCJA, as well as a greater percentage of tax jobs relative to total tax and audit jobs. The
number of tax job postings is greater in each of the two years immediately following the TCJA,
across all levels of positions within public accounting firms (e.g., associate, etc.), and for both
Big 4 and non-Big 4 firms. I estimate a lower bound of demand for an additional 5,855 tax jobs
in public accounting in the two years after the TCJA. My study offers timely evidence to
researchers and practitioners of how tax regulation impacts the accounting labor market, which is
particularly important considering the recent concern over the supply of accounting labor.

Author

• Katie Daugherty, Indiana University