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In the US, low- and lower-middle-class income households often do face very high effective marginal tax rates - sometimes north of 60% - due to the combination of direct taxes and benefit cliffs and phase-outs. State income taxes and benefit programs can exacerbate this. Slightly dated reference (2012) but [0] is still pretty representative.

[0] https://www.cbo.gov/sites/default/files/cbofiles/attachments...

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Loss of benefit is not a tax.

It functions like a tax in that it decreases the net amount that you receive for working (more). If you lose 40 cents' worth of benefits for every additional dollar that you earn, it doesn't matter that your "real" marginal tax rate is only 25% - earning an additional pre-tax dollar only makes you 35 cents richer, just as it would if your marginal tax rate were 65%.

Also, while some of those benefits are less fungible, others have phase-outs that are functionally identical to taxes at the margin. For example, if you get subsidized health insurance through healthcare.gov, every additional dollar that you earn directly reduces your tax refund by up to ten cents, on top of your marginal tax rate.

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