Sure, he can live on it. But since he can no longer afford the luxuries with which he's rewarded himself for his hard work, why bother working so hard? Down goes productivity, since it is punished anyway.
Of course. More likely, actually, is that tax avoidance measure will be taken.
My understanding is that in Europe top executives have MUCH more extensive expense accounts: clothing allowance, housing allowance, entertainment allowance, etc.
Compensation just moves from taxable into non-taxable categories.
Many if not most top earners today are not tied to a specific locality. If they consider themselves overtaxed, they’ll just move somewhere else. And the government involved loses all of their tax.