The calculations aren't wrong (well, they might be, but it's immaterial). What is wrong is the belief that this is the way things have to be, and that the choice is a binary "keep the status quo" or "eliminate welfare".
Why do we cut the amount of welfare people get as their income increases? Well, there's the obvious reason, that their income should supplant welfare. Is that what happens? No. Their income ends up paying less than welfare, until they earn sufficiently high amounts.
Why is that? Because the system is broken. As a cynic, I would even say that the pressure to cut it off earlier, rather than later, largely stems from conservative pressures ("if they're able to work that minimum wage job for 30 hours, then they certainly should be able to work 40! Stop their governmental handout at 30 hours!" "Okay, then we'll just work 20" "If they can work 20, they can work 30! Stop their governmental handout at 20 hours!" Etc). That is, this broken system that they're speaking out against is -exactly the broken one they caused-.
What would actually make sense? Well, tailoring off welfare payments at some percentage of earned income. Let's say 50%.
That is, someone on welfare earns $50 one month from a job, their welfare payout reduces by $25. Take into account additional costs as deductibles; things like "Driving to the job took an extra $10 from me" - okay, fine, then your welfare payout is reduced only $15. The tax payer has saved $15 (as only $35 was paid to the welfare recipient), the welfare recipient came out ahead by $25 ($50 earned + ($25 welfare + $10 gas refund/deductible) - $10 gas cost; they walk away with $75, $50 of which they earned), -and- they're working toward rejoining the workforce. Welfare effectively stops once they've reached wages of 2x welfare + cost of incidentals, and until they reach that point, every extra dollar they earn is a net gain to them; there is no valley where their purchasing power actually drops because they chose to work.
While we're at it, if we're really concerned about people working, let's also fund more job training centers, more disability rehab and job placement centers, etc.
Why don't we do all of that? Because there is no political pressure to do that; conservatives would rather completely dismantle welfare, and liberals either aren't that concerned by the status quo, or are tired of trying to work with conservatives over the issue (and so it's become a shouting match where both parties have drawn lines in the sand and refused to compromise).