The amount the payout is reduced depends on the SP and weighting of the flag.  

The answer is: it depends.  It can take it down to zero, and is happening to @haejin presently, because he is drawing too much out of the rewards pool owned by the whales.  They're willing to let us have crumbs, because we, the community, put upwards pressure on the price of Steem, and they need that to make money.

If we, as @haejin did, start costing them too much money, this is how they fix that, and keep their money in their rewards pool, so they can profit from their stakes.