Wow, I've never had one of my posts spin off into it's own thread before. This is kind of fun.
First let me say that I think many of the arguments against the taxing of PCs I've seen in other threads and in other places are about the reasoning behind it or the in-game logic or any of that, they're really arguments about how some people just don't want to deal with taxes in game. Maybe it's too much paperwork, maybe you resent a real world responsibility entering the game. However, that's how you want to play. For those who just don't want taxes in your game, arguing against how taxes could work with how you're opposed to taxes is going to derail the discussion. Some people want more realistic weapons, or more historically accurate armor, or a more realistic economy. Just because it's not your cup of tea doesn't make it wrong, just a different style of play.
1. While the government may want to tax the players, they may lack the power to do so. Sure, armed resistance results in outlaw PCs, but the city guardsmen the PCs just blew through are likely just as dead.
There have been numerous articles and posts related to RPGs over the years about what happens when the PCs are more powerful than the government. With the power curve in games like D&D, sooner or later it takes an army to stop the PCs, or another group of PCs. A lot of what's been said boils down to cultural controls.
In short form, pretty much every local lord has the strength of arms to kill the king's tax collector. Yet while there have been cases of people refusing to pay taxes in history and things coming to a head with arrest or outright war, most people, even well armed ones, still pay their taxes. The penalty of being removed from society and becoming an outlaw simply outweighs the cost of taxes in most cases.
And if your PCs go the other way with things, choosing to ignore all laws because they are too powerful to arrest, then they should expect every city they visit to respond by locking the gates and marshaling the army to keep the PCs out. (Not to mention that the PCs now become an adventure threat for someone else to track down and deal with.)
2. In-game knowledge vs. meta-game knowledge. Unless the PCs are marching in with sacks of coin on their back, just how in the hell does the government know the party is rich? And please don't go down the divination road, I'm looking for an answer that can apply at the village, town, city, or metropolis level.
Unless the PCs have a spare portable hole or some really big bags of holding, when they come back with that treasure trove they are carrying sacks of valuable items that tend to clink together. Frankly, the small children of the farms they pass know they've just hit it rich, never mind the trained professionals like tax men and pickpockets.
Even if the PCs hide their treasure, the typical party heads for town to convert their oddly shaped items into portable gold, spend the money they've acquired on new goodies, and then head down to the tavern for drinks. People see this money get spread around and that word reaches other ears. There's also bragging by the adventurers of their glorious deeds... whether it's the PCs themselves, their henchmen, or word coming from the people they just saved from the evil. Well known heroes become well known because their story is spread.
To put it into a real world analogy, American history had periods of time where there were mineral rushes in areas. There would be towns that catered to the miners. When a miner came in with gold or silver and had money to spend, people quickly knew. Merchants raised their prices, those looking to get a piece of the money sought out the miner, and people talked about it all because it was something interesting happens.
Now imagine that instead of just finding some shiny rocks in a river, the guy walking into town has just killed a fantastic monster and taken its treasure. You think people are going to talk more or less?
Now, I have seen players who were good at hiding what they'd recovered because they were afraid of getting robbed. Someone like that may just take all the necessary steps to avoid taxation since no one knows they've got anything worth taxing. This breaks down if the PCs have a home base because the money they spend on land, a house, furniture, food, and luxury items will show that they've got wealth to burn, which people will eventually notice.
3. What tax(es) can legitimately be levied? Oh, I realize the government can come up with whatever they like, but one-offs/exceptions require a specific plan-of-attack versus an everyday or seasonal tax. Also, the idea of a "magic item tax" is pure BS (See point #2, above).
Historically, taxes can be levied on pretty much anything someone can think of. These taxes ranged from the mundane to the ridiculous. Got married? Had a kid? Your horse gave birth too? There's taxes for each of those. People got taxes for crossing bridges, for using the mill to grind flour, for riding in carriages, for owning certain things, for doing certain activities, and even such things as being of a particular nationality or religious belief. During the time of Peter the Great, any Russian man who wore a beard was required to pay a special tax.
I've read about a tax placed on tattoos. Human beings are very creative in coming up with new taxes.
Keep in mind that while many modern countries use a tax model based off of income, meaning you pay a percentage of what you earn, this is not how all taxes are now or have previously been modeled.
Taxes are often levied based on what you are worth. You own a house on an acre of land? 50 gold, please. Oh, it has a tower with an alchemy lab in it? That counts as business tools, so it's 100 gold. You own six horses, two of them war trained? Another 40 gold. You have some nice furniture here. That's 20 gold more. You'll pay the same again next year. (These taxes can be the most dangerous to the poor farmer because they have to pay X coins per acre and Y coins per building whether the crop yield is good or bad. In a bad year, paying the taxes can mean starvation.)
The idea of a magic item tax is not BS. People were taxed because they owned certain tools, so why not magic items? Leaders covet magic items, so taxing them makes sense: It brings in income, it helps keep track of who has the items, and sometimes you can seize the item when the person doesn't pay their taxes.
Taxes can also be levied for a particular purpose that the lord has. One historical example is to levy an immediate tax so that a lord can finance or equip an army. This could be a tax on the head of every citizen, a tax for just property owners, or even a tax that has to be paid by any able bodied man to keep their name out of the pool when conscription rolls around.
Remember, most modern American and European taxes are based on an idea of being "fair". They're levied for a purpose, whether that's an income tax to finance the government or a tax on alcohol or cigarettes designed to keep people from using them. Historically, the basic "fairness" of taxes was entirely dependent on who was currently running the country and what their laws would allow people to get away with.
(I put "fair" in quotes because I realize that many modern taxes can be argued as fair or unfair depending on your perspective. The idea I'm expressing is that they're supposed to be "fair", not to start a debate on if they actually are "fair".)
I'm all for taxation if there are in-game justifications for it. But I've seen numerous groups that are cool with the concept that they blew their money on ales-n-whores go from town heroes to fugitives-at-large once the government starts screwing with them. Especially, if they just saved said community's/government's bacon.
But this is a whole other situation. That's a group of players who are greatly opposed to having taxes in the game. Just like a group that hates detailed weapon rules or who thinks keeping track of material components for spells is extremely lame, you shouldn't force the taxes on them. Just either ignore the PCs involvement in that part of the economy or assume their taxes are part of why the prices they pay for goods are so high.
Oh, and paying taxes is not the government "screwing with them." Taxes are just a way of expressing a more realistic economy. If they're the kind of players who think that a 10' pole costing more than a 10' ladder (which is made from two 10' poles) because the pole is adventuring gear and so should be more expensive, then they really don't need to delve into things like economy or taxes.
And again, a magically-equipped equivalent to the IRS is not, IMO, a viable answer.
But it wouldn't be a magically equipped equivalent of the IRS. It would be either adventurers or an army who solved the tax problems.
When a king can't get a lord or landowner to pay taxes and the "polite" requests have failed, he sends troops to seize the land and possessions of the debtor and probably throw that fellow in jail (or just hang him). If he's too powerful for an army, or an army isn't available, the king can hire mercenaries (aka adventurers) to go deal with the rebel lord who has turned up his nose at the law and refused his king. It worked historically and it can work in the game.
Face it, typical adventurers can be tax collectors. If the king wants you to evict some evil, nasty, not paying taxes monsters from an area of land so that nice, upright, tax paying citizens can farm it and expand the kingdom, that's all about increasing the taxes in the king's coffers.
Sorry, that turned out longer than I'd intended. The comparisons between game world "economy" and the real world is a passion of mine.
