It might do that year to year, but overall the big deals signed for free agents by teams like the Yankees would probably funnel more money to the mid market teams than it cost them. It would also mean that their own players might be more likely to sign extensions with the mid market teams since they wouldn't be "taxed".
Based on years played for their old team (up to 20%), so 1.6M for each of the 3 years. It doesn't matter though, since as I realized after the players union would never go for it anyway. It wouldn't add complexity though for bonuses or option years, since it would be paid out after each year is completed and those totals were known.
This is really the point though. The QO system sucks (no matter how you manipulate it it's going to be unfair for someone), adding millions of extra picks sucks (even though we gamed it well).
Giving teams the extra slot bonus to apply to the IFA's and the draft (I think I mentioned that the draft would move to a similar format as IFA rather than people getting picks) would seem to strike a good balance. Teams who can't retain their stars should have an increased opportunity to draft new ones since they could offer more money if they chose to. Teams also wouldn't be rewarded for sucking to the degree they are now. The players shouldn't be hurt at all under the system too.
You could also perhaps modify the system so that the calculated bonus was the difference in AAV that the player received. IE, under that system an aging star who switched teams probably wouldn't net the team that lost them anything (and they shouldn't), but the type of key player that a rebuilding team might lose certainly would.