Traditionally, variables such as GDP per capita, population growth rate, openness, nonagricultural share of GDP are included into the models of taxation as the most important explanatory variables. It is, however, argued that these variables are not the sole or even most important determinants of taxation. So, a critical literature has developed that led to a relatively new approach to taxation research, according to which institutions and institutional variables are as important as, or even more important than, the traditional factors. This relatively rich idea produced supportive empirical studies. These researches usually use general indices of good governance and other similar variables and examine the effects of democracy, property right enforcement and government efficiency on tax on GDP ratios. The main claim of this article is that this method of investigation, unfortunately, ruins the aforementioned rich idea and suffers from the same shortcoming as the traditional approach to taxation does. Indeed, we need to adopt alternative methods of enquiry to understand an institution's effects properly.Adopting an institutional approach to analysis, this article developed a new explanatory model to explain the taxation power of government. According to this model, these are the institutions which form an individual's understanding and imagination of the behavior of other agents and the expected payoff of alternative strategies. Agents' decision is a function of internal and external incentives. On one hand, if they cannot bargain for tax laws through interest groups and satisfy their interest in this level, tax evasion will occur vastly. In such circumstances, agents appeal to individual strategies which lead to the corruption of agents and tax collectors in the cost of other citizens. Tax collection turns to be absolutely difficult and the executive organization degenerates gradually if a large percent of agents find this more beneficial than adopting a collective action.On the basis of this background, the history of Iranian taxation was investigated. Although weak and low quality data do not let us to test the key hypothesis, but by appealing to this model one can shed light on parts of this history. Evidences imply that over the period from 1285 to 1357 the collective action never became possible and the taxation power of government (which means, by definition, government's ability to collect direct taxes from private sector) was weak. These evidences neither are completely corroborative of hypothesis, nor falsify it thoroughly. In the meanwhile, this is a helpful instrument to understand and explain the taxation power of government. One of the policy implications of this study is that when collective action is difficult to emerge or form, changing rules and substituting tax systems cannot improve the taxation power of government. Historical review also implies that tax reforms put into effect during this period were thoroughly fruitless and in some cases(such as removing Iranian traditional Federal System of taxation) led to a weaker taxation power.