We already have a good solution to avoid ghettoisation or traps called progressive taxation. However, it doesn't go far enough because the tax rate doesn't tak

We already have a good solution to avoid ghettoisation or traps called progressive taxation. However, it doesn't go far enough because the tax rate doesn't take benefits into account, so even though you're getting >$0.80 of every dollar earned, after adjusting for benefits it may instead be $0.20 or even negative. The Earned Income Tax Credit (EITC) is an especially large contributor to this situation [1]. To avoid a trap, marginal income after taxes and benefits should start high and fall monotonically. It should probably also be concave up (the amount of income to bump you into the next 'adjusted tax' bracket gets bigger and bigger). [1] https://www.urban.org/sites/default/files/alfresco/publication-pdfs/412722-How-Marginal-Tax-Rates-Affect-Families-at-Various-Levels-of-Poverty.PDF https://www.urban.org/sites/default/files/alfresco/publicati... (page 767, Figure 2)