In that part of the paper Scheidel is discussing the work of other scholars (particularly Lo Cascio and Brunt) who arrived at seemingly high mobilisation rates in Republican Rome. With the quote you mention Scheidel is countering the criticism (of unnamed persons) that the mobilisation is TOO high: so high as to cast doubt on the estimations made by La Cascio and Brunt. Scheidel argues that the claim that the mobilisation is too high is based on a comparison with early modern times - a comparison which is deeply flawed "because of fundamental differences in mobilisation practices".

The fundamental difference here is that in early modern Europe taxes were mostly collected in the form of money and materials, which were then used to pay, feed and equip soldiers (and/or to hire mercenaries). This requires that you keep a pretty broad base of tax payers so that you can support this system over time, meaning that you can't have too many of your people mobilised (mobilised troops don't contribute as much to taxes).

In Republican Rome on the other hand hardly any material taxes were collected. In fact, after the conquest of Greece Rome had become so rich that citizens no longer had to pay any tax at all. Instead Rome expected its citizens to serve in the army. Until the Late Republic Rome operated a citizen militia (with some peculiarities). If your "tax payers" pay their "tax" by serving in the military, you can mobilise a larger percentage of your population without the system breaking down. This is what Scheidel means with "taxing military labor".

Similarly, Roman allies often made most of their contributions to Rome in the form of auxiliary troops. Instead of them giving Rome money and then Rome having to hire mercenaries, Rome simply got soldiers. It greatly simplifies the process.

I hope this answers your question!