* * *
The ruler of a location is the unit stacked beneath the lone castle
or tower in the region. 
Here is the tax scheme I prefer: 
A TAX <severity> command can be applied by a ruling force to the
province entity. It attempts to extract gold from the citizenry. 
The province's loyalty will decrease proportional to the severity
of taxation. It may also lose population, thus decreasing the
TAXing a province will not yield so much money as to destabilize
the game. And it's not windfall income, it's a command that takes
time to execute. Think of it as mining gold from the pockets of
The location entity itself may be persuaded to SWEAR to a faction.
Locations will be able to perform a limited set of commands, possibly
including ATTACK, DECLARE, WORK, STUDY, GIVE, TAKE, USE, but not TAX.
* * *
The ruler of a province is controlled militarily from a tower
Only the ruler may TAX the province.
The ruler may decide to use force to turn away travelers at
the border. 
The province itself may be controlled by the same
faction, or another one, or it may be independent.
One player could militarily control a region, while the "mind of
the people" was in another player's hands.
Military control and the province's featly could be in the same player's
hands. He would then worry about how much to TAX himself, since taxing
hurts his province.
High taxes would cause the province's loyalty to fall. Another
player could get control of the province, stack some military units
with it, and battle the ruler in his castle.
Players could control locations which didn't have castles or towers
in them. But they wouldn't be able to tax or control their region
until they built a defensive structure.
* * *
 Taxing applies only to the population of the region entity itself,
not to character entities which may be present in the location.
If you want to shake them down for money, use ATTACK BOOTY.
Taxing works only on the helpless masses.
 Currently you can only build either a tower or a castle in a region.
Rule would be determined by possession of the single tower or castle
a region contained. It would not be affected by houses, inns, mines
or other structures.
 Via a declared attitude.
To forcibly enter a location barred to you, ATTACK <direction> could
be used. This would mean: enter the province if unopposed, otherwise
fight your way in. The MOVE order would simply fail if the units were
not permitted entry.
 I prefer this taxation scheme over the "set taxrate <percent>"
variety for several reasons:
It is much less complicated than trying to put hooks in
every economic transaction that might take place in a province.
It doesn't depend on having real character entities in
a region to work.
I like the ruler-taxation-province-loyalty feedback effects
-- Rich Skrenta <email@example.com> N2QAV