I think Darth Venom is right. The total Region Wealth is probably the best variable for the game to use when trying to determine the worth of a region. If that's the case though, it doesn't explain why the AI would so heavily devalue one of the OP's regions that was currently tax exempt. Who knows. Like I said, ETW does a much better job of explaining what's going on under the hood through in-game tool tips, but there are still aspects that are not clearly explained, and how the AI values regions when figuring out trade proposals is one of them.