More knights is better for a region. You get better efficiency and your region produces more gold. I make more in Idapur with full knights and estates at 100% than I do with no knights. In fact,I poached several from other Lords in Arcaea. My knights make way more than what an average knight makes. Because of that I actually make a lot more gold.
I'd be interested to see your bookkeeping because I find that hard to believe. As a lord you get 50% of the tax gold from vacant estates. Occupied estates only give you the "lord's share", usually around 10-15%.
