Tax Policy of Gondor
As can be seen from military organization, Gondor is in fact a centralized monarchy in the vein of Byzantine Empire. It remained a fairly centralized monarchy, with not a trace of feudalism to be seen. History is also similar: where Arnor fell apart into multiple kingdoms (echoing both barbarization of Western Roman Empire, and later division of Carolingian Empire into three kingdoms), Gondor endured. Much like Byzantium, part of reason for its endurance was that it was much less exposed: whereas Arnor had no major physical barriers between its core lands and Angmar, Gondor’s core lands were protected from Mordor by Anduin, and from wild men by the White Mountains. Similarly, Eastern Empire had its core lands protected by the Danube, Black Sea, and Taurus / Antitaurus ranges; and while Danube ultimately proved permeable, Bosphorus protected Anatolia.
Eventually, Eastern Empire lost half of the territory to Muslim Arabs, and then half of the remaining territory to Slavs. Out of field army of 150 000, around 80 000 were evacuated to quarters in Anatolia, where they were garrisoned and supported by taxes in kind. The Empire – which is closest to Gondor of the Stewards – was by no means feudal. It continued central government, with provinces (transformed into themata) controlled by the governors who were recallable at will. And while soldiers drew their income from the lands they were given, governors – who were in fact commanders of field armies – depended solely on wages paid by the central government. It was also the Emperor who gave soldier his lands, not the governor. Thus there was no separatism; governors who wished to rebel had to take the centre of power – they could not become semi-independent rulers as was the case in the West. Wealth did not automatically mean political office, and many capable men used Imperial administration to rise from low origins to very high places: it was not unknown for a slave or a peasant to become an emperor, as happened to Basil I., former slave who became founder of the Macedonean dynasty. Unlike feudal West, officials could be appointed and removed at will, and offices were not inheritable.
This is the system we see in Gondor: forces which arrive to assist defence of Minas Tirith are identified by province they hail from, not by their allegiance to a particular family. And while Imrahil is commander of fief of Belfalas, he is only Lord of Dol Amroth. Fiefs themselves appear to be no feudal fiefs, but rather areas of governance akin to Byzantine themes. All areas are fairly similar in size (with few exceptions), and no lord is referred to as being a vassal of another. Gondorian knights likewise are heavy cavalry, but have no feudal implications with them. Western knights were in fact based on Byzantine cataphractii, which Westerners encountered during Justinian’s campaign for reconquest of Italy. Cataphractii were abandoned after Arab invasions, due to being too expensive; but they reappear in 10th century, and Byzantine army with them advanced nearly to Jerusalem.
Empire in the West was fictionally reestablished after Irene gained the throne. Between her being a murderous tyrant and being a woman, the Pope considered the imperial throne to be empty. As such, he offered the crown to Charlemagne – or rather, he tricked Charlemagne into being crowned an Emperor against his will.
Much like Byzantium, Gondor is likely heavily ruralized. Byzantium had become less urbanized and more agrarian as Arab expansion cut off the trade routes, and constant warfare devastated the countryside that cities depended on. Populace moved out of the valleys and into mountainside shelters, and what cities remained had shrunk and fortified. Constantinople remained as the only major city in the Empire, but it too lost much of its population. In fact, it is estimated that cities shrunk to a quarter of their previous size, and all of them fortified. This is seen in Gondor as well: Osgilliath was abandoned under pressures of war, while Minas Tirith had – much like Constantinople – significantly reduced: “Yet it was in truth falling year by year into decay; and already it lacked half the men that could have dwelt at ease there”. The basic unit of the fiscal system were the villages (choria), and this too was likely true in Gondor.
This also has implications for taxation. Gondorian taxation is likely to be similar to Byzantine model. This means that taxes would be paid to provincial governors in coin and in kind, with central government receiving taxes in coin. Main source of income would be taxation; land tax and head tax in particular. Soldiers would get tax benefits, but would not be tax-exempt. Byzantine Empire had a flat tax on all citizens (head tax), while farmers (some of whom actually lived in cities) paid additional tax based on size and quality of land and their annual production.
Centralization of government under kings and, later, stewards means that taxation system will be – compared to feudal model – far more structured, standardized and regular, but also likely heavier. This will allow long-term financial planning. Byzantine Empire retained an educated bureocracy, and this is likely true in Gondor. While we do not see much of it, it is known that old writings are kept for thousands of years (such as Isildur’s writing on One Ring), even when they cannot be understood any longer. This organized record-keeping implies that at least some form of bureaucracy survives.
Gondor also controls the mouth of Anduin, and is thus capable of taxing any trade passing that way, as well as much of coastal trade. During days of its power, it will also have controlled the trade through Gap of Rohan, and trade on Isen.
Trade, however, was mostly an internal affair in Middle Byzantine Empire, and it likely is also mostly an internal affair in Gondor. For while Anduin does pass some places which could be traded with, to the west there is mostly emptiness, and to the east and south only enemies. As such, elites would derive their income and power from their estates and the governmental salaries.