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I claim to be Duke and use Tax if challenged can I back out of using the action?

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No you can't back out of an action after someone challenges your claim. Once you make your decision and give people a chance to challenge it you are stuck with what you declared.

Joe W
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    Or in other words, the rules say if you get challenged and were lying, you lose an influence (a life, basically), not that you get to choose whether or not you'd like to lose it. – Cascabel Jan 10 '15 at 16:19