There may be some cases--if a person is on the edge of being eligible for SNAP, or for SSDI for a dependent adult in their houshold, where getting a raise might actually make them poorer. It's wrong to say people do this because they're too stupid to know about marginal tax rates.
My state fixed this so the marginal rate was never over 100%, but there is a rather wide range where the marginal rate is about 75%. For every dollar you earn, you keep 25¢, and are paying in 75¢ in the form of getting fewer refundable tax credits, food stamps, energy bill assistance, and so on. (If I include the energy bill assistance, the marginal rate is 85% in a few bands.)
Is it? There are situations where it makes sense to avoid a rise and stay in the tax bracket. Like if with 5k rise you loose a 10k childcare benefits provided by local municipality.
Yes, the anecdote about misunderstanding a particular thing may be broken if you introduce additional factors.
The absurd thing in your scenario is the steep cliff on the benefit...this doesn't change the observation that some people have absurd beliefs about how progressive taxes are implemented.
That's not tax brackets though, that's income. Talking about tax brackets is weirdly indirect way to talk about income. The people who avoid raises because they think they'll be taxed higher on all their income because they don't understand how brackets work aren't the same people who avoid raises because it'll cause them to earn too much to be eligible for government assistance programs.
