Only allow certain people to use the flag (aka moderators)
I believe this has a great potential for abuse and if many of you have spent time on reddit you will know what I mean.

that would be against the idea of a decentralized platform.

I generally agree with you, but recently I've been thinking about it. As the number of publishers grow, I've mainly see an increase in "low-quality" posts. It's getting more difficult to find good content as it gets drowned in, well, cow shit. In fact, we can safely say that there are negative external effects to posting low-quality content, and as with any distorted market, the way to restore things is to internalize those externalities. That is in my opinion the only reason for a tax. Right now, it might actually be a good idea to impose a tax on posting. That is, the creation of blog posts should costs some steem power. In that case, it only makes sense to create quality posts, reducing mainly low-quality posts, and making it easier to have exposure with good quality posts.

It would need to be accompanied with a change in the voting algorithm that is more fair and improves chances for minnows. If it works, there is less need for a flag as spam should reduce. In the end, the people on the streets enjoy better music and guitarists should not be afraid that their case gets burned.

In terms of your guitar example, if every street artists needs to pay a dollar up front to be on the streets, we don't see guitarists that do not expect to earn that dollar back. However, those guitarists that do enter the street, should have equal chances to earn their dollar back. If that works, we don't need to burn all the crappy guitar cases.