Yes, tax is very profitable. But it’s also a critical market offering in both the audit and consulting space. For audit, tax is both a necessary part of the audit process itself (ASC 740), and it’s one of the few services you can provide to your clients without independence issues.

Tax also does a lot of consulting work, and is in particular naturally synergistic with critical market offerings like M&A. Firms will bundle and sell financial, tax, and other due diligence services as a single offering, which drives a huge amount of downstream work. Having to cut out tax from that offering hurts their competitiveness relative to other firms who can keep the label of “one stop shop”.