Tax Base

You're the mayor of a town with 5,000 people in it. A French company called Belle Fromage opens a cheese factory on the outskirts of town, specializing in the production of an especially pungent form of Limburger. A lot of your residents move away. A few months later, only 3,500 people remain.

Your tax base just dropped from 5,000 to 3,500. It will be a lot harder to raise the money for the community miniature golf course you had planned. There are 1,500 fewer people you can tax.

The term "tax base" refers to the total amount of assets a government has in its jurisidiction with which it can draw revenue. It's not the amount the government actually taxes; it doesn't equal total government revenues. It's the full pie from which the government takes its slice.