One better way to do this is to simply pay state representatives the average salary that their constituents earn. New York legislators are currently complaining that "the current $79,500 annual salary for the part-time job isn't sufficient to live in New York state," even though the median household income in New York is under $58,000 per year. Odd.
One problem with imposing immediate harsh limits on the pay of politicians is that politicians are very reluctant to vote for such a thing. Slashing one's own salary is too high a psychological barrier for most to overcome. So here's another idea: play the long game. Let elected officials have their little salary raises every decade or so. Make them agree to something that requires much more moral fortitude.
This is a suggestion that Nassim Nicholas Taleb puts forward in his most recent book, Antifragile: "A simple solution, but quite drastic: anyone who goes into public service should not be allowed to subsequently earn more from any commercial activity than the income of the highest paid civil servant. It is like a voluntary cap (it would prevent people from using public office as a credential-building temporary accommodation, then going to Wall Street to earn several million dollars). This would get priestly people into office."
A voluntary restriction on what public servants could earn after they leave office. This would do much more than solve the relatively minor issue of what politicians and regulators get paid; it would also solve the much larger and more deleterious issue of the revolving door between government and industry.
More people who actually want to serve the public as public servants. It's not a bad idea. Consider the alternative: what we have now.