A job is the means by which you convert human capital to financial capital. If taxes are raised on direct compensation, this conversion becomes less efficient.

A job is the means by which you convert human capital to financial capital. If taxes are raised on direct compensation, this conversion becomes less efficient. Talented executives would likely exploit opportunities to earn stock at artificially low valuations. You can do this by joining startups or private companies who typically have more flexibility with valuations. This could make public companies relatively less attractive to talent, and they could suffer as a result. To the extent that retail investors and pension funds have more access to public companies than private companies or startups, they could suffer as well. If you theoretically limited all compensation then you would distort the market in other ways - beyond a certain amount of cash and stock compensation (taxed at confiscatory rates), I would start to optimize for things like multiple secretaries, nepotism, a massive office, and other items which wouldn't necessarily help the business.