It is when you convert your citizens into the tax-people (i've forgotten the name ). You can only do this once your city(s) reach size 6. Once they do, simply remove a citizen from working a square, then change him/her from an entertainer to a tax-dude (by clicking on their head).
Most people also refer to whatever portion of your total income is set to collect in your treasury as 'tax income' also. Btw, what you are refering to, and what Gainy just addressed, is how much money your tax collectors are making.
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