How exactly can't you make any income by having more planets?
Like I said, this is only a problem on large/huge maps.Its not a problem in small games like you are talking about having 10 planets, I'm talking about huge maps with 5-6 stars and 100+ planets.
Once you get more than 20 or so planets, the further a planet is a away from your home system the more corruption it incurs. Even with capped civilian upgrades, trade ports and media hubs etc etc a planet thats far from your home planet will practically bring in zero income.
It reaches a point where its more beneficial for you to not colonize planets, since colonizing them and building them up is more of a cost burden since your income becomes less and less as you gain more planets and have a capped fleet.
As others have said, I don't think you understand how it works.
All the penalties for fleet size and allegiance are percentage reductions. Sure, the amount you earn per planet falls as you expand to planets further from your capital and increase your fleet capacity, but it never goes negative. The only way a planet can be losing you money is if you haven't developed the population infrastructure.
Not to mention, with the fleet cap, its almost impossible to defend all you planets once you get above 20 planets. Since planetary defenses are almost useless, in large/huge games enemies just rush thru and target your planets infrastructure, knocking it back down to zero and putting these planets back into the red.
Again, to the best of my knowledge, planet developments can't be damaged or destroyed without destroying the world, so there's no way for them to go 'into the red' through having orbital structures destroyed. At worst, you'll lose the resource income from destroyed extractors.
So in essence, you can have 50 planets with the most tech in the galaxy, but the banana republic empire with 10 planets can field a fleet just as large as yours and also has more income than you since he doesnt have the tax burden of the larger empire, so he can outbuild you after a major battle even though you have 30 more planets then him.
He can field a fleet as large as yours, but he can't have more income unless you're managing your empire very, very badly.
Incidentally, while I understand the concerns that many people have with the current fleet caps, I'm very much in favour of them being the same regardless of empire size.