Well yes, if you are in the top 1% of wage earners in the US your effective tax rate is going to be pretty high. In fact, you'll pay around $200,000 in taxes on that, give or take (if you live in a high-tax state like California). But that's literally affecting 1% of the population, and they're probably doing ok.
> If you earn much more than that, generally companies find other ways to pay you
Most companies give equity in the form of RSU's rather than options, so income taxes hit immediately upon vesting.
> And yes, FICA is definitely a tax.
Yes they are a payroll tax, but just "adding" them into your income taxes is extremely misleading. Income tax is just that. FICA is a payroll tax.
Incorrect.
The highest marginal rate kicks in, for married-filing-jointly, at just over $470K; the next highest at over $416K. You have to making close to $1M in taxable income for a married couple to be paying the top marginal rate on most of their income, and over $800K to paying at least the second-highest marginal rate on most of your income.
At $500K, you're just barely paying at least the third highest marginal rate on half your income.
If you earn much more than that, generally companies find other ways to pay you (equity, deferred compensation, etc.) that have more administrative overhead, but less of a tax hit.
And yes, FICA is definitely a tax. A regressive one since the rate goes down the higher your income is, but it's still a tax.