> At least in the government, there should be a law that any hypothetical scenario where someone making more money before government taxes/incentives would cause them to earn less after, must be quickly resolved by replacing hard cutoffs with gradients.

Multiple programs, offered by different jurisdictions, with overlapping populations, each with sliding scale benefits that reduce less than $1 of benefit for each $ of income, still can (and do) end up with beneficiaries losing in net with additional income. But instead of doing so at particular cliff points associated with each program, they do so continually over a wide range. You replace a series of cliffs with a slide.