The following is my understanding of my State's welfare program:
Currently, there are built in rewards for the poor to make more money (at least in my State; see below for an example). However, there are consequences for making too much money. Families can easily use thousands of dollars worth of government food stamps, housing assistance and healthcare. Unfortunately, families can make say $1,000 more during a year and loose state assistance. In other words, if a family is using $4,000 worth of state healthcare, then someone gets a raise (for example) putting their household income $1,000 more than they made before, they are suddenly taken of state healthcare and are down $3,000 per year. If the family understands this concept and they are already barely scraping by (which is the case when on welfare), they are likely to avoid making that extra $1,000 in order to avoid loosing $3,000 in welfare. Therefore, if this ceiling were not in place, and those on welfare were not penalized for making more money, I believe more people would be making efforts to come off welfare.
The built in reward (which many are not aware of ) is that for programs that are based on percentiles, e.g. there is a housing assistance program in which those approved pay only 30% of their income toward rent, there is incentive to make more money. For example, the below two income levels and budgets are simplified versions of the "built in reward system":
Income = $12,000 per year ($1,000 per month)
Rent = $300
This family would be left with $700 per month for the rest of their bills.
Income = $24,000 per year ($2,000 per month)
Rent = $600 per month
This family would be left with $11400 per month for the rest of their bills (that is double what family 1 has leftover for their bills). Therefore, under this program there are clearly benefits to making more money ... of course until you make a few hundred over the cut-off.
I am not sure if there are any built in tax reduction benefits for making more money in the lower income brackets, but if they do exist, I am not aware of them and obviously state workers should be educating those on welfare of such tax rewards (if they exist), as I have talked to many families and they do not know of such benefits. Additionally, most families are not aware of the built in rewards that are in place (see above) and thus social workers should be educating families about them.