Personally, I'd be willing to take a 1.5% paycut to work in SF instead of the Valley, because I can't stand suburban commutes. But that kind of reasoning is probably why I'm in NYC instead of out west to begin with.

EDIT: Also, I'd suspect that the "1.5% on payrolls over 150k" only applies to the amount in overage, because that's the way most graduated taxes work. So it'd be 150 bucks on the 10k of overage in your 160k example.