Sure, they probably could, but what's the point of a upper class income if you only get a middle class lifestyle? Your working mostly for the benefit of the state, rather then your own, in which case, why bother? Altruism? Charity? That's not how the world works. I don't know about you, but I don't get up and go to work for the betterment of society or to bring in revenue for the state. I get up and go to work for a paycheck.
If income over $1 million was taxed to the levels your suggesting, why bother giving it to the employee? Why not just forward any income above 1 million directly to the government? Obviously, it's a poor business move to directly send off money for no gain whatsoever, so income is effectively capped at 1 million. Consider this: instead of an executive making $50 million, he now makes $1 million (good move for the company and is better then "wasting" 49 million in taxes) since the effective tax rate is around 80-85% under this huge tax change. Even if he was paying just 15% in taxes before, that's FAR more then he is paying now in taxes making $1 million. The government loses tax revenue.
Edited by Dronac - 5/1/12 at 6:05pm