It's almost always a good choice in my experience. The reduced taxes only applies to one county and only to city holdings so if you only have one poorly developed city in the county it's likely you will get more money.
Castles, not cities. But I invite you to do your own math, you can see exactly how much that castle is bringing in annually by clicking your primary title. Multiply by ten.
Chances are it'll be somewhere around 360 gold (that is to say, 36 a year, 3 a month), and the mayor is usually offering around 200 gold.
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