Are you sure about this ? I see nothing about this in the rules, this could change the game immensly. It could mean that someone who landed on taxation could lose the flag of that country before he could count the taxation markers on the map.
He's wrong. First you take the action of the rondel space. If due to Taxation a nation reaches 25 power points, the game immediately ends and there are no more investments. That's explicitly stated in the rulebook.