Removing the witness discount does not hurt miner incentives.
They were mining 1000000 vBytes before, they will be mining 1000000 vBytes afterwards. And vBytes (or Weight Units) are the unit by which fees are measured.

Also since I haven't seen anyone do this before, let's do the math on transaction sizes under different consensus rules.

Consensus Rule ScenariosConsensus Rule Scenarios

• Current Rules: No CISA, 75% witness discount
• BIP459: CISA Full-Agg, 75% witness discount
• BIP459 + Remove Witness Discount: CISA Full-Agg, No witness discount

Transaction TypesTransaction Types

• Simple payment with change (1 input, 2 outputs)
• 3 UTXO Consolidation (3 inputs, 1 output)
• 5 UTXO Consolidation (5 inputs, 1 output)
• 10 UTXO Consolidation (10 inputs, 1 output)
• Coinjoin (14 inputs, 18 outputs)
• ~50 kB JPEG Inscription (1 input with data, 1 dust output)

CalculationCalculation

Assuming the use of Schnorr Signatures.

$w$ is the witness cost factor.

$i$ is the input count.

$o$ is the output count.

TX size without CISA:

TX size with CISA Full-Agg (Might be off by a byte or two, depends on how it is ultimatelly implemented):

Simple payment with change (1 input, 2 outputs)Simple payment with change (1 input, 2 outputs)

• Current Rules: $f(0.25,1,2)=154$ vBytes
• BIP459: $g(0.25,1,2)=154$ vBytes
• BIP459 + Remove Witness Discount: $g(1,1,2)=205$ vBytes

33.12% increase

3 UTXO Consolidation (3 inputs, 1 output)3 UTXO Consolidation (3 inputs, 1 output)

• Current Rules: $f(0.25,3,1)=226$ vBytes
• BIP459: $g(0.25,3,1)=193$ vBytes
• BIP459 + Remove Witness Discount: $g(1,3,1)=244$ vBytes

7.96% increase

5 UTXO Consolidation (5 inputs, 1 output)5 UTXO Consolidation (5 inputs, 1 output)

• Current Rules: $f(0.25,5,1)=341$ vBytes
• BIP459: $g(0.25,5,1)=275$ vBytes
• BIP459 + Remove Witness Discount: $g(1,5,1)=326$ vBytes

4.4% decrease

10 UTXO Consolidation (10 inputs, 1 output)10 UTXO Consolidation (10 inputs, 1 output)

• Current Rules: $f(0.25,10,1)=628.5$ vBytes
• BIP459: $g(0.25,10,1)=480$ vBytes
• BIP459 + Remove Witness Discount: $g(1,10,1)=531$ vBytes

15.51% decrease

Coinjoin (14 inputs, 18 outputs)Coinjoin (14 inputs, 18 outputs)

• Current Rules: $f(0.25,14,18)=1589.5$ vBytes
• BIP459: $g(0.25,14,18)=1375$ vBytes
• BIP459 + Remove Witness Discount: $g(1,14,18)=1426$ vBytes

10.29% decrease

~50 kB JPEG Inscription (1 input with data, 1 dust output)~50 kB JPEG Inscription (1 input with data, 1 dust output)

TX size:

• Current Rules: $f(0.25)=12594.5$ vBytes
• Remove Witness Discount: $f(1)=50096$ vBytes

397.76% increase

Let's put it into a table: