The Crown wants to raise taxes from time to time. You have 3 options:
- Boycott, but pay the taxes back. You have to pay as much as if you bought 500 tons of the boycotted good.
- Boycott, and don't trade with the king (until Fugger).
- Accept the tax raise.
All options cost a lot. Let's analyze exactly how much.
Let's assume that the good in question is cotton, and its price is 5/7. Payback cost is 3500. You need to sell 700 just to break even (assuming no production cost, no transport cost, no fall in prices due to selling so much in Europe and 0% taxes), and you need to pay that money in advance.
Because you must sell 700 tons just to break even, or rather 1000-1500 tons counting all the costs, it may be much more profitable to use that 3500 gold that you mysteriously had in your treasury for something else, and trade with Indians and other powers until Fugger comes. The only goods which are reasonable to pay the fine for are mass-produced goods, like furs after Hudson. You probably won't ever produce 1000 tons of silver, so just forget there is such thing as silver if you boycott it (and throwing out up to 100 tons of silver for a silver party also hurts).
The analysis is similar for other goods. Payback cost is 500 times the asking price, which is slightly higher than the bidding price, so selling about 550-700 tons is required just to break even (but as much as 1500 tons for 1/3 price goods).
Accepting a tax raise is something that you may not like, because it's irreversible. But the cost of a 1%-2% tax raise is relatively small. Let's assume that during the development phase you will sell goods for 100000 gold. The crown will take 1000-2000. It's a reasonable assumption, as 100000 gold gets you 5 Privateers, 5 Galleons and 150 colonists, much more than enough for building a great empire. Later it doesn't really matter how much the king taxes, as you will be self-sustaining and focus on heavy industry and the army.
And the best part is that you don't have to pay it all in advance (as you have to with the boycott+payback method), but gradually as the money comes.
- reject the tax if it's something you don't care about (food, trade goods)
- reject the tax if Fugger is about to come (obviously)
- accept the tax if it's small (1%-2%) and you need that good, it's not mass-produced or you don't have free money (that is - it's early game)
- reject and pay back if it's some mass-produced goods for which you can break even after 10-20 turns (production of at least 50 tons per turn).
- reject and pay back if the tax is huge (>=5%), you really need that trade, and you can get money for the payback somehow (in very early game you may be unable to find 3000 gold even if you think it's very profitable in the long term to pay back)
It's hard to tell whether specialization in just one cash crop makes you more or less vulnerable. If you produce just one crop simply include the cost of regular payback in your calculations. If you produce a lot of goods, you will have to shut down part of the industry each time the king proposes a new tax, as the payback would be too expensive.
A word of warning, the king likes to tax the item that you could sell for the most in your stock (total amount of stock in city * rate you can sell good in Europe).
Ore is initially much more expensive than tools and guns. So early on, buy the tools and guns and don't bother producing them.
You're going to need a lot of tools for roads, plowing and buildings. Roads for the used fields are obviously important, but roads between your colonies are even more crucial, even though it may not seem that way at first (see colony management below - they're also good for defense).
Remember to deforest and plow squares used by the colony. Forests in the colony square produce only furs, not lumber, and without the Hudson multiplier. After the forest is cleared you get more food and some nice cash crop.