Tax rates have a direct effect on the governor of a city.

Try placing a governor in a city and keep the taxes on low for years. He will develop into a "nice" person.. literally. you will begin seeing traits like "lenient" "humanitarian" "benevolent governor" "inefficient tax collector". There are benefits to it, but it will prevent the character from raising taxes efficiently down the line. Same is true for very high taxes... that just a sampling.