The cost for an employer gets cheaper as an employee makes more money, not more expensive. There are no increasing marginal rates for employer payroll taxes- just the employee state/federal income taxes.
Often times paying out compensation in cash like this is just too expensive. It's a weird concept that the cost of cash is a curve mostly dictated by tax rates. When the IRS is taking 55% at certain points in the curve, you get much bigger bang for the buck by offering other benefits, like maximizing expense reimbursements. (phone, internet, qualified commuting expenses, food & entertainment, etc.)