Professor Jerry Pierce
Share
RICHARD: Welcome to the interview series hosted by the Tulip Thesis Blog. Today, my guest is Professor Jerry Pierce, adjunct professor at George Mason’s Costello College of Business. Prof. Pierce currently teaches Survey of Accounting and leverages his 38+ years of experience to provide students with insight into the accounting industry as well as prepare them with the basic analytical skills needed to succeed in finance and accounting. Before his career in academia, Professor Pierce was a partner at KPMG’s tax office in the Washington, DC metro area, specializing in corporate tax strategies and improving operations. Throughout his career, Prof. Pierce has worked with a wide range of clients, spanning from Fortune 500 companies to local start-ups. As a Senior Partner and Tax Industry Leader for the Aerospace and Defense sector, Prof. Pierce served the top aerospace and defense contractors in the US. He also served as Senior Tax Leader for industrial markets from 2017 to 2019. In 2012, Prof. Pierce received the Distinguished Alumni Award from the George Mason College of Business (now the Costello College of Business) and was also named to the list of Smart CPAs by SmartCFO Magazine.
Professor Pierce, welcome.
JERRY PIERCE: Thank you. Happy to be here.
RICHARD: My first question is, as a tax accountant, what did your job entail?
JERRY PIERCE: My first job at Arthur Andersen and Co. was back in 1981. I started as an auditor, and then I switched to the tax department, and my day-to-day activities were preparing individual income tax returns, partnership tax returns, and corporation income tax returns. It was mostly driven by compliance efforts that taught me the material (tax), and I was working closely under a senior that had 2-3 years of experience, who would direct my talents and skills so that I could progress up the ladder quickly.
RICHARD: With many Fortune 500 companies operating overseas, double taxation could be a potential issue due to the US’s worldwide income tax policy. As an accountant, how do you navigate different countries' tax laws and adjust company strategies accordingly?
JERRY PIERCE: The first thing you must do is build a team because no one will know all the tax laws in all the different countries. You’ve got Fortune 500 companies in 150+ countries. You need to work with a team, a company like KPMG or the Big Four, because they have tax professionals in those countries that you’re going to need to make a worldwide tax plan. Countries tax certain income differently and at different tax rates, so you need to build a very tax-efficient tax structure so that you can move money around the globe at the least tax cost. Many companies are trying to minimize the tax burden to do additional research and development, and you must be able to push the cash to the right country at the right time. Companies are not necessarily looking to bring the money back to the US, even though now there are taxes when you don’t bring the money back to the US immediately. To avoid double taxation, one must build a detailed tax strategy to take advantage of each country's tax laws—a complex puzzle.
And tax laws change based on changes in administration. That puzzle gets changed every time there’s a new administration in each country. That puzzle must continuously be rebuilt and refined repeatedly, over
and over to achieve the desired tax result. You’re never going to get it perfect because not only does the tax law change in that country, but your operations change in that country as well. You must marry what you’re doing in that country with the local country laws and then bring that back into the US laws. It’s a
unique and complex puzzle that one person can rarely do by themselves. They’re going to need a large team around the globe to understand each country's tax laws. So, building a team is a must.
RICHARD: From your experience as Senior Lead Tax Partner for the aerospace and defense sector, in what scenarios would aerospace and defense companies trade off higher taxes for growth potential? Do you have an example?
JERRY PIERCE: First, nobody wants higher taxes. At least in the US, the large aerospace and defense companies know who their customer is, which is the US government. The US government needs to understand that the more taxes that are paid by the aerospace and defense industry, the less money there is to put into research and development. A lot of the ideas that come about for our US military are driven by the profits that are made by the aerospace and defense companies that are then reinvested back into technology development. There’s a constant struggle with how profitable aerospace and defense companies are and how they use that profitability to drive more research. The US government does a wonderful job in military technology research, but they need help from the private sector. The private sector hires a lot of the top college graduates and people in the industry to refine and discover new technologies. There's a good tension between profitability and government contracting. To me, it often boils back down to research and development. When you talk about growth in taxes, certainly if you’re a public company, you’re also looking at the bottom line. The government asks these companies how to strengthen our military and makes sure those companies make ample profits that can be used to reinvest into the US government/military.
RICHARD: According to Deloitte’s 2025 Aerospace and Defense Industry Outlook, talent attraction and turnover rates in the industry have been worrisome, citing that “over 67% of respondents in the National Association of Manufacturers’ outlook survey for the second quarter of 2024 identified ‘attracting and retaining a quality workforce” as a primary business challenge.” Later in the report, Deloitte highlights that “the aging workforce is a persistent problem in the industry, with 25% of the workforce having more than 20 years of experience and being at or beyond the eligible retirement age.” Why are labor issues such a prevalent theme in the aerospace and defense industry, and how do you see this changing with the implementation of new technologies?
JERRY PIERCE: When you think back, the technological advancements that have occurred over the last 50 years are attracting a new generation of workers. The older, less technologically savvy planes and military boats all had nice capabilities, but those capabilities have changed a hundredfold over the last 50+ years.
It’s not just manufacturing. It’s coming up with the ideas and deployment of technologies. Today, we have GPS-driven missiles that can hit their target within feet. You have a change in the workforce, meaning you have workers with a lot more technological savviness. The older workforce hasn’t learned those skills, and they will eventually leave the workforce, but they will be replaced with young, promising minds with curiosity. Today's young workforce has had strong technology in their hands from a young age—the cell phone that didn’t exist until the ‘90s. Computers were not introduced to the accounting profession
until the early ‘80s. We can now do things much quicker, faster, and cheaper by using technology and with a lot less labor.
The concern is still there. Yes, the workforce is aging. But I think that you’ll find that the younger workforce will replace these older workers with a whole diverse set of skills that they learned from an early age. As an example, you can write an article today, and it can be published to the entire globe in minutes. That did not occur in the past. You learned about things by talking about them, and now you learn about things by putting them on the web, and you can receive information the exact same way. Knowledge is at your fingertips.
You don’t just have to look at the technology the US has. We have a lot of NATO countries that can share technology with us, and we will share it with them. We now build self-driving cars with robots, meaning fewer hands-on people building things and more people programming robots that can do that task more accurately than the human workforce.
The aging A & D workforce is an issue, but it’s not one that we should get really alarmed about. Anytime people leave a company, there’s a certain amount of knowledge that leaves with that individual, but there’s always somebody there to replace you. Either they can replace you physically or they can replace you with technology. I don’t see the growth and use of technology slowing down.
RICHARD: With rocket technology seeing substantial amounts of both public and private investment, do you see the aerospace and defense industry entering a new era? If so, will companies be faced with a new set of operating efficiency problems?
JERRY PIERCE: Yes. You think about it in far-fetched ways of Star Wars or like cartoons that had a jetpack on the cartoon characters, and they were flying around. Nobody thought about cellphones. The first cellphones I can remember being used weighed over three pounds. Now, it’s down to half a pound, and you have access to the entire globe. With missiles, I think they’re going to be more accurate.
Everybody wants to be able to hit each country with a long-range missile. How do we handle things that go through space? How are our satellites going to deal with incoming missiles launched from other countries? How do we stop them in space? Do we let them get through the atmosphere and stop it once it gets through? There are many areas to explore, and many of the advanced countries are working on them.
The days of ground war are not over, but it’s going to be much more of a ballistic missile-type war and how quickly you can shut down the ground game of any country. You’re going to continue to see substantial investment into using satellites and using space as the next frontier to either protect our own country or to defend against an attack on another. It is “game on” for the space war.
RICHARD: Professor Pierce, thank you.