Previously I've been under the impression that always running very high tax is the way to go, because it earns you the most money. While this is true, it doesn't factor in the additional cost of garrisons. When running very high tax you almost always need a larger garrison than is supported for free with militia buildings, so in order for vh tax to be worth while the additional tax income has to outweigh the upkeep cost of the garrison.
While you're looking at the tax screen of a city, adjust the tax level and look at how much more or less money you're getting out of a settlement at vh tax vs normal tax. For an average settlement that makes 2-3000 florins per turn, the difference between vh and normal is probably about 300-400 dollars. Because taxation and public order are directly linked, when you raise taxes you're selling excess public order for cash. Lowering taxes is the reverse - you're buying extra public order by lowering tax.
While a settlement is small (under 6000 population or so), at normal tax you've probably got 150%+ public order, no matter how large the garrison is. In a situation like this you've got public order coming out the wazoo so obviously you should crank up the taxes to get the extra couple hundred florins a turn. With small settlements that you've religiously converted you should be able to maintain this with only 1 or 2 free garrison. Also, the low level public order buildings (churches, town halls, brothels, etc) are really cheap for what they provide. The first two levels of PO buildings are always worth the money they provide via the allowance of higher tax.
As a settlement gets larger, the picture becomes more complex. PO buildings get really expensive for what they provide both in terms of cash and time. You don't want to let one of your big cities build a tavern for 3 turns and 3200 florins or a mayor's house for 4800 and 5 turns when they could be building the next level of militia building or spending that cash on troops. Also, as settlements get larger garrison becomes less effective on a per unit scale.
When a city is 10-15k in population or larger, running very high or even high tax can need 8-10 units of garrison, if not more. Even if half the garrison is free upkeep, the other 4 or 5 units are costing at least 100 florins a turn. Since the difference in income between normal and very high tax is about 400-500 florins and your non-free garrison costs 100-150 florins per turn in upkeep, you're actually losing money at very high tax vs normal tax.
Thus as a general rule, the most profitable state of a city after the inclusion of garrison is very high tax when the settlement is small, and normal or low tax when the settlement is large. The way to tell is to look at the cost of the garrison necessary to maintain order at high tax against the extra tax you get. If you're spending more on garrison than you're getting on tax, knock down the tax and disband some units.
This tidy rule has some exceptions. It's tacitly assumed in the above that you aren't worried about your settlements being attacked. If you are, you'll want a much larger garrison. In that situation, bump up the taxes while the army is in town and the town will help pay for them while they benefit from higher public order. Front line cities can almost always support higher tax than core cities because relief armies are typically nearby or in the city itself.
Another exception relates to family members. Running a city on normal or low tax with a family member is begging for the 'bad taxman' trait. So don't. The payoff of extra income from having a family member in the city is nothing (50 florins per turn, big deal) compared to the usefulness of a general at the front lines. I never keep family members in cities. If you want them to make you money, send them out with armies to sack cities. You'll get way more bang for your buck that way than if you hope for management traits. The only time a family member should be used in a city is when you have high dread/chivalry generals like crusaders. Their presence in a city can sometimes add 60 or 80% public order, allowing higher tax, and thus more cash.