If a team consistently goes over their allotment the agents will just automatically think they can force a team to go over the slot value for their clients. I think the Twins are smart by holding the line. Yeah, you may occasionally lose out on signing a later round high school player, but the vast majority of those players will never make the big leagues. That money is better spent elsewhere.
And would that extra $700K even been enough to lure someone like #20 Larson from going to LSU? It's a lot, but it's not life altering money. He has the opportunity to play for one of the best collegiate programs in the country.