lmao, if you suppressed high-level free agent salaries and lowered the luxury tax, the Blue Jays would never get a blue chip free agent again. You'd have the exact same situation you have with the Raptors in the NBA. If players can only make a certain amount, they will have way more options and will always pick a warmer, lower tax, American city. The only way the Jays can get premium free agents is under the current system, where they can overpay for them.
You'd also have a much harder time acquiring players like Donaldson and Berrios under your proposed system. If smaller market teams are forced to spend more, they're going to choose to use those dollars on players like that instead of trading them away.