While the downsides of this are obvious, I wonder if in the long run this would push our cities towards better designs, by encouraging the mixing of residential and office buildings, and by encouraging improvements to implementing public transit that can quickly and efficiently move a dense population between their homes and their jobs. It probably wouldn't work, but I can dream.
That sounds great, and I care enough about this that I moved somewhere with well-designed transit, but I still think it's a problematic policy. Some people might want to live in a bigger place further out, and if they're willing to make the long commute (and pay for its negative externalities, which most aren't) then I don't see why they can't.
I actually prefer to bike to work, but I doubt any employer would be willing to give me my hourly rate for that...