Taxation is the process in which you raise megacredits. You can tax colonists or (if any) natives. Amorphous natives do not pay taxes. There are two commonly used taxation practices. A combined maximum of 5000 megacredits may be raised per planet per turn. Cyborg colonies can collect megacredits from a maximum of 20% taxes on the natives.
Taxation slows the growth so dramatically that it is not always wise to tax. If you cannot get a lot of megacredits from taxing, then it is usually better to not tax at well as long as the population is still able to grow. Even 1% taxes slows growth to 5/6.
Safe taxing employs a constant taxation which allows megacredits to be raised every turn without decreasing happiness. As a general rule, this is not recommended, except in situations where the population cannot grow any further due to climate conditions.
Growth taxing employs spikes in taxation. On one turn, a lot of taxing can be done while no taxes are employed on subsequent turns to maximize growth. This has the risk of accidentally causing riots and civil wars if this is left unchanged due to the dramastic change in happiness this imposes.
The base formula for the amount of money raised is as follows, where r is the tax rate, p is population, and g is the government modifier (for colonists, g = 100):
The amount of megacredits that may be collected from natives is capped by the number of colonist clans present at a ratio of 1:1. Then bonuses from the The Solar Federation and Insectoids are applied multiplicatively (meaning that Feds taxing an Insectoid planet get 4x the money). Despite these bonuses, the final cap is still 5000 megacredits.