That question "What was Aragorn's tax policy" has been attributed to George R. R. Martin, and cited as an inspiration for his books. This, despite the fact that his books don't really answer questions of that nature. Though it does support my previous assertion that Martin is less trying to tear down fantasy and more trying to steer the genre in a better direction. While Martin writes a great deal about the political machinations of the courts: he mostly ignores questions of actual policy. The Westerosi economy is as much a mystery as the Gondorian one. But that mystery is lesser than it first appears. Because in fact, many clues about the economics of various societies within Middle-Earth CAN be deduced from the text. I will be confining my analysis to the societies presented in The Lord of the Rings and The Hobbit.
Now the first clue to Gondor's economy is in Tolkien's text itself: Gondor uses money. The exact denominations are given, but they aren't particularly important. Gondor has a currency, made of metal. That is important. It is also significant that Gondor's currency is the only one known to be used in Middle Earth. Perhaps the Easterlings have their own currency, we cannot know for sure. It is also significant that Smaug lies on a bed made of coins: but the dwarves don't seem to care at all about these coins. They care only about the items with a use-value. The coins, clearly, have limited use for the dwarves: which makes sense if they can only be redeemed for value in the markets of Gondor. Of course, just because Gondor has a currency doesn't mean that all or even most transactions involve currency: most likely, the vast majority of trades are by barter. This was true for most of human history. The original function of currency was as a substitution for trade items that were immovable: such as land. However, there is no mention made of credit. The Hobbits pay for their rooms in the Prancing Pony, but the meal and beer seem to be included. This suggests that the value of resources is extremely low. This makes sense if most societies in this world do not even have a market economy. As indeed, neither the elves nor the dwarves seem to.
An incident in The Hobbit illustrates how the non-human residents of Middle Earth view material possessions. Thranduil takes the Arkenstone, a large and valuable gem. Thorin becomes offended. However, neither party even bothers to tally up how much the Arkenstone is worth compared to any other item. Tolkien doesn't even bother to tell us what type of gem the Arkenstone actually is. One would think that would be important to the characters who are arguing over it. From the description it could be several different things: a star sapphire, jadeite, agate, jasper, quartz, or a pale turquoise. Obviously, those gems would have vastly different values given their wildly varying hardness and qualities. It seems to be an uncut gem as well, which would further decrease it's intrinsic value. Despite it's size, in other words, the Arkenstone isn't likely all that valuable: not valuable enough for two Kings to fight over. But, it's intrinsic value is not of concern to Thranduil. He doesn't care what the stone is: only what it looks like. He wants the Arkenstone, because it reminds him of another gem: the Silmaril once worn by King Thingol of the Sindar.
The Arkenstone's value for Thranduil then, is in it's use as a memento. But what about for Thorin? Well, he's a dwarf. Dwarves, above all else, like to craft stuff. Furthermore, the Arkenstone is a symbol of his clan. So again, the Arkenstone's value for Thorin has nothing to do with it's intrinsic value. It's value for him, is as a symbol of power and as a potential crafting material. A market economy then, simply wouldn't make sense to either Thranduil or Thorin: demonstrating their inhuman psyches. So what does this mean for Gondor then? well, full-blown capitalism simply wouldn't function in this world. You can't make people pay for milk with gold if elves will accept feathers as payment or dwarves will accept seaglass. Gondor's market economy then, such as it is, must be confined to those things that humans consider luxurious or special. Even here, prices can't be firmly fixed. An elven merchant might want silver coins over gold, and a dwarf might be more concerned with the gold's purity than with the coin's established value. Haggling would be the norm, and non-standard forms of payment would probably be acceptable.
So what is Aragorn's tax policy? well first of all...does he even have one? Does the King of Gondor levy taxes? One might think "well duh, he's a king, of course he does". Actually however, the evidence points to the answer being "no". But wait...the Kings of Gondor are wealthy. Look at the grand palace, look at the clothes they wear and the priceless jewels they are crowned with. They have staff, who have to be clothed and fed. Well yes, but the mere fact that they have wealth does not imply they are taxing their subjects. Elendil brought staggering wealth with him, when he fled Númenor: wealth which has been invested over time. Aside from this: Aragorn inherits all the wealth of Elrond and Galadriel as well. In other words, Aragorn doesn't need a tax policy. He has more money than he knows what to do with dumped on his lap. The Ring of Barahir alone, a ring forged in Valinor, is worth more money than exists in the world today. The Elessar from which he derives his throne-name, is not only an intrinsically valuable gemstone but also magical. If Aragorn is levying anything, it is soldiers: not taxes. This then is the answer. Aragorn's "tax policy" is military service.
See, the thing about Aragorn is that his position is technically not what was called a "king", historically. In Latin, the term "rex" denoted a tribal chieftain: although it is usually translated in texts as "king". While I've been calling him the King of Gondor here, he's technically not that at all. He is the King of the Reunited Kingdom: not truly a successor to Eärnur, but to Elendil. This means he is not a "king", but a High King. Indeed, his full title is spelled out in the King's Letter quoted in the Appendices to LotR: "Aragorn Elessar, King of Gondor and Arnor and Lord of the Westlands." What this actually means is that his Kingdom was even larger than that of Elendil: for it included what had been the realm of Lindon in the Second Age, and had become Rivendell and Lothlórien. Of course, the elves who had inhabited those realms in the Third Age were now gone: and Rivendell itself was now uninhabitable without the power of Vilya to hold back the furious Bruinen. However, the point remains: Only Rohan and Mirkwood were not under his rule in any shape or form.
Unlike the Kings of Gondor, Aragorn has sovereign leaders as vassals: Thain Peregrin Took, Mayor Samwise Gamgee of the Shire, Master Meriadoc Brandybuck of Buckland, Prince Imrahil of Dol Amroth, Prince Faramir of Ithilien, King Bard II of Dale, and King Dain Ironfoot of Erebor. He was in this sense a High King as that term was used historically in the real world. This is a position very different from that of the medieval monarch we associate with the word "king". His realm is far more akin to the Commonwealth of Great Britain, and his authority is similarly limited. Aragorn is not so much a direct ruler, at least outside the city of Gondor or the rebuilt Annuminas, as he is a military and cultural leader. His role is primarily to defeat Sauron's forces, and to be a model of righteous behavior. In other words, everything the rulers in A Song of Ice and Fire are decidedly not. But this does make him akin to the Biblical kings of Israel: who again, were technically High Kings. They ruled over the twelve tribes of Israel, each of which had it's own sovereign ruler.
So Aragorn is not levying taxes. If he is levying anything, it is soldiers. His underlings might or might not tax their people: the hobbits don't seem to pay taxes, and it would be surprising if the Princes of Dol Amroth levied anything since again their wealth derives from Númenor. No dwarf would willingly hand over gold, no matter how much he loved his King. The Kings of Dale don't seem to have any wealth to speak of, nor do they seem to much care about acquiring it. Only Faramir might be levying taxes, since he needs to rebuild Minas Ithil, and that's a big IF. Faramir's family also has Númenorean wealth after all, presumably invested in Emyn Arnen. Indeed, given their suspicious habit of naming themselves after people specifically tied to the hero of the first age Húrin Thalion, it could be that Faramir's family is illustrious indeed: and in possession of artifacts that could rival the Ring of Barahir for value. They may not be hurting for money in the slightest, so he might very well be only levying labor.
It is not the King's job to see that the city streets are clean, or the sewer is working: presumably Minas Tirith has a mayor. This is the person levying taxes in order to ensure public services then. In ancient and medieval times, this tended to be how things worked. Only in modern times do states concern themselves with infrastructure, with a few noteworthy exceptions like the ancient Persian highway system. This is of course because ancient states rarely had any infrastructure large enough that it was necessary to pay for it by levying taxes. Even Rome paid for it's roads with the loot from foreign conquests, not through taxation.
Without full-blown capitalism, Gondor doesn't need to provide welfare services the way that Rome did. Bread and circuses are not required. Additionally, it should be noted, wealth cannot buy you power in any way shape or form. There are no elections, and offices cannot be bought. Neither can marriages: the concept of a bride-price or dowry does not seem to exist. There are poorer and richer citizens of Gondor, but no one is so poor that they must depend on the state for assistance. It's not even clear that land is bought and sold. Even if it is, during the reign of King Elessar the price of land would plummet. The freeing of Ithilien from the orcs would open up lands that have been off-limits for centuries. Éomer and Faramir would be giving away land left right and center as they pushed the orcs back farther into Mordor. Anyone willing to work hard, would be able to get themselves a plot. At the same time, Aragorn is also opening up lands in the Northern Kingdom. For those who don't want to farm, a townhouse in Annúminas and plenty of work would be easily attainable.
For the past few centuries, Gondor has been desperately clinging to the Anduin river valley. Other settlements existed on tributaries. The Shire is cut off, an island of peace in a sea of turmoil. The lands of the North are inhabited only by wights and regrets, with the Kingdom of Dale as the sole remnant of the splendor that was Arnor. It is a world grown cold with paranoia, which even the events of The Hobbit did little to thaw. This is the world created by the Witch King, at the bidding of Sauron. But in this cold world some lights still burn. Gandalf, Elrond, Galadriel, and the Dúnedain. A web of light is woven centered on Rivendell, and the undying love of Elrond for all his kin. It is not hope that keeps the men of Gondor fighting, but pride. It is not hope that makes Aragorn and the Rangers get up each day and watch the borders, but love. It is not hope that keeps Galadriel fighting Sauron, but sheer bravado. Hope has to be brought in from outside of the world, by Gandalf.
The situation at the end of Return of the King could not be more different. Hope reigns in this world, and spreads out over all the world. King Elessar is not merely a beacon of hope for the men of Gondor, but for all the Free Peoples. And indeed, for those who were once Sauron's subjects too. He makes peace with the Haradrim, and retakes Umbar for Gondor. The downfall of Sauron is the end of the cold and dark, the end of night and the beginning of day. It is not the end of evil for all time, of course. It is however a golden age, a time of hope for the future. In short, King Elessar creates the social conditions necessary for people to be good. They have a leader they can trust, full bellies, and the promise of a better future. Anyone can be generous, forgiving and kind in those circumstances. Even the most uncaring people have no reason to be cruel if there is neither scarcity nor animosity. Only the most twisted would have any reason to cheat, kill, or steal: and they would be rightly afraid of Aragorn's wrath. This is why they call him "Envinyatar", which means "redeemer".
An economy based on wages presupposes that if wages aren't paid then no one will work. It supposes that people are intrinsically lazy. Biology contravenes this idea. Animals, and we are animals, are hard-wired to work for their livelihood. The idea of taxes presupposes that people need money as a motivator: either it's a bribe to the state, or it's a means for the state to bribe private actors. But Aragorn needs no such extrinsic motivation. He has been protecting and nurturing his vast kingdom for his entire life, without pay or thanks. Love and hope, and a thousand years of simmering righteous anger, are all he needs to get up and push the frontier forwards every day. Nor does it seem likely the men who follow him have a need for such crude motivators as money. "what was Aragorn's tax policy?" is thus entirely the wrong question. The real question is why do we think he needs one.
Tolkien was making a point about human nature. It's not hard to be good when you live in a good society. When all the incentives are for being kind, very few people will refuse to show kindness. If you have it good, it's easy to feel generous. The harder things are for you, the harder it is to feel that you should help even those less fortunate than yourself. And if you cannot trust your country's leaders, it's hard to trust your fellow citizens as well. Paranoia is the cause of most atrocities in the world. Anyone can become a concentration camp guard with the right mix of paranoia and ego-mania: unless they actively resist such thinking. Science bears out Tolkien's conclusion. Perfectly normal college students were willing to give their fellow students, who had done nothing wrong, electric shocks that would result in severe burns. But while all of this sounds bleak, it's really not. What if I told you that we have been able to feed the world since the Bronze Age?
Greedy kings and then corporations have taken what the people produced, and wasted it. There, that is the history of the Iron Age and the Industrial Revolution, the modern age and the postmodern age in a single sentence. The people of Gondor might call Aragorn a "king", but he is not a king as we tend to think of them. Nor is he the product of Tolkien's vision. He is Isaiah's Messiah. Funny what you realize when you try to translate Christmas Carols. Not the Christ of the Gospels, but the Emmanuel spoken of in the final book of the Old Testament: a warlord with divine powers of healing and inspiration. If such a man were to exist in the real modern world, he would not be called a "king". But perhaps he might be called "commandante".