It probably wasn't a terrible idea, but the EITC isn't a full implementation of it. I don't recall the details, but I don't think MF proposed that you had to make any money to qualify for the negative tax, so it operated more like a basic income guarantee. The EITC requires a minimum level of income to qualify, which to me lessens its impact. I think a good place to start with overhauling the tax code is to implement a negative income tax and to redefine earnings as income, whatever the source. Of the poor people who don't qualify for income tax payment, all of them who earn a single dollar pay a hefty payroll tax, which I think is another place that could use reform, but that's a whole other ballgame.
The minimum income to qualify for EITC is $1, and self-employment such as selling on eBay qualifies, so the main hurdles to overcome are awareness of the program and filing a return, similar to the negative income tax. Interesting points in the article: "In 1969, Richard Nixon proposed the Family Assistance Plan, which included a guaranteed minimum income in the form of a negative income tax." (rejected by the Senate, eventually enacted in 1975) "In 1993, President Clinton tripled the EITC. Today, the EITC is one of the largest anti-poverty tools in the United States." "Most income measures, including the poverty rate, do not account for the credit." With one child and parent filing singly or as head of household: • Tax credit equals $0.34 for each dollar of earned income for income up to $10,540. • For income between $10,540 and $19,330, the tax credit is constant at $3,584. • For income between $19,330 and $41,765, the tax credit decreases by $0.1598 for each dollar earned over $19,330. • For income over $41,765, the tax credit is zero. "The IRS estimates that about 20 percent of eligible taxpayers do not claim $7.3 billion of Earned Income Tax Credit (EITC) each tax year."
At a cost of $56 billion in 2013, the EITC is the third-largest social welfare program in the United States after Medicaid ($275 billion federal and $127 billion state expenditures) and food stamps ($78 billion). Almost 27 million American households received more than $56 billion in payments through the EITC in 2010. These EITC dollars had a significant impact on the lives and communities of the nation's lowest-paid working people largely repaying any payroll taxes they may have paid. The EITC is one of the most effective social welfare programs in the United States. The Census Bureau, using an alternative calculation of poverty, found that EITC lifted 5.4 million above the poverty line in 2010.
Due to its structure, the EITC is effective at targeting assistance to low-income families in the bottom two quintiles—0–40% of households. By contrast, only 30% of minimum wage workers live in families near or below the federal poverty line, as most are teenagers, young adults, students, or spouses supplementing their studies or family income. Opponents of the minimum wage argue that it is a less efficient means to help the poor than adjusting the EITC.