Your demand for taxes changes happiness. Note that these happiness changes occur before actual taxation. If the happiness before this stage is below 30, taxes are set to zero (and new happiness is computed according to this rate). If the happiness after this stage is below 30, no taxes are collected either.

Colonist_happiness_change =
   Trunc(10 - Sqrt(Colonist_clans / 10000)
            - Abs(Temperature - Target_temperature) / Temp_divisor
            - (Mines + Factories) / 300
            - Colonist_tax * 0.8)
   ...where Target_temperature = 100 and Temp_divisor = 66
      if owner is Crystal and CrystalsPreferDeserts is on
   ...where Target_temperature = 50 and Temp_divisor = 33
      otherwise

Native_happiness_change =
   Trunc(5 + Native_gov_number / 2
         - Sqrt(Native_clans / 10000)
         - (Mines + Factories) / 200
         - Native_tax * 0.85)
   ...plus 10 if natives are Avian

The Native_gov_number is tabulated in the Planet Rules section (e.g. 6 for Monarchy, yielding a value of 6/2 = 3 for the first term).

Happiness is summarized as follows:

Happiness_level =
   "happy"           ...if Happiness ≥ 90
   "calm"            ...if Happiness ≥ 70
   "unhappy"         ...if Happiness ≥ 50
   "very angry"      ...if Happiness ≥ 40
   "rioting"         ...if Happiness ≥ 20
   "fighting"        ...if Happiness < 20

Happiness_change_level =
   "hate you"        ...if Happiness_change < -5
   "angry about you" ...if Happiness_change < 0
   "undecided"       ...if Happiness_change = 0
   "like your leadership"
                     ...if Happiness_change ≤ 4
   "love you"        ...if Happiness_change ≥ 5