Not the earner, but the corporation paying the compensation. This would be on gross compensation, wages, stock options, stock grants, etc. If your C-level staff make more than 50x the average pay in your corporation, there is a 100% luxury tax on that excess amount.

That means if the average employee at XYZ Corp makes $50,000 the C-level can’t make more than a combined average of $2,500,000, every dollar over that average, is taxed at 100%. So your $80,000,000 CEO salary now is costing the company $157,500,000 because of the $77,500,000 luxury tax. Watch those compensations come into alignment really fast.

That will also cause employee wages to rise because a company will want to stay in compliance to avoid the luxury tax. And your CEO wants to make as much as s/he can. That tax is essentially wasted funds for the corporation, better to pay employees than the government.