This is a topic that has been in long debate, and for good reason. The very foundations of such a topic are easily debatable, anything further built upon said foundation then becomes a bit.. for lack of a better word, shaky. Know my words act as a point of furthering the thoughts of this debate, rather then being argumentative.
Firstly, we have to decide what is considered balanced. Should being wide always be more effective then being tall? Tall has a natural advantage: the fact you don't have to work for it. Being tall simply means not conquering or expanding too greatly, so it's easy to per say play tall in the most literal sense. To play wide you have natural competitors, other empires vying for territory, and thus must work harder for it. If you were to go into a game with the idea of playing tall, well no one's stopping you from doing just that. So in theory, were you to make the two perfectly balanced, where going wide gains you little to no real additional research or unity due to increasing empire sprawl, and it took considerable effort to gain said territory, then what's really the point of going wide? Being more powerful militarily speaking, perhaps, but technology as it stands is the ruler of Stellaris, as it increases literally everything by substantial amounts in the game. In what might be interpreted as balanced, wide would in such a world be considered the lesser choice, until you've gained a technological leap that enemies can never hope to catch up to, and thus tall having no longer any use.
To some this may be entertaining, (especially those who roleplay their empires as such) but most dislike the idea of not being rewarded for a hard won conquest, and in this case, potentially even -harming- you. (since it'll be at the cost of technology and unity) Should wide then be slightly better? Marginally? Or is it okay that being tall would be the most powerful route from a gameplay perspective?
So now that I've added some thoughts, I'm now going to focus on my opinions on the matter. Ultimately, I think there should be more benefits to playing tall - rather then nerfing playing wide to the ground, I think it should be focused on making tall more viable. To me, encouraging playing tall to such a degree it becomes meta is far worse then what we have currently. This game as it stands isn't one of intrigue, this game largely focuses on war. There isn't a whole lot to do if you aren't planning for war. Technology is gained to have the upper hand and go to war, economy is enhanced to go to war, fleets are prepared to go to war. Tall and war aren't exclusive, but there aren't many benefits to gain from war if you're playing tall. It'd be an overall pretty boring game for a long time if the game's early to mid game revolved around going tall.
I think the gap is certainly as it stands too wide (pun intended) in between the two, but I'd personally focus on enhancing/buffing tall, rather then nerfing wide. Bridging the gap between the two too much will encourage a play-style that this game just simply isn't built for. The game isn't designed to make things interesting outside of war. Even diplomacy mostly focuses on aspects of war, (or keeping others from warring with you) with anything outside of that being a simple press of a button. For example, trade agreements while aren't directly war related, they also don't make anything more interesting about managing your empire. Playing wide plays into what this game was designed for, space age warfare. If the game was more interesting during peace time, such as managing your empire in fascinating ways then I'd be uttering different words for certain.
How would I buff playing tall? One way is to give them a -proper- diplomatic stance. Maybe two or three, for different empires. As it stands, there's a few really great choices for those playing wide, but almost none for tall. Maybe another new diplomatic stance is in order as well, something which increases empire sprawl dramatically from colonies but also increases technology, among potentially other things. I mean some serious benefits, but also be brutal about the weakness so that wide can't properly utilize it.
That's at least an idea, perhaps I'll think more on it to see if I can add anything more later.
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