Milton Friedman's idea for alleviating poverty was a variation of this idea. It's called the negative income tax and the basic idea is that people below a certain threshold get cash from the government each year. The further below the threshold you are, the more cash you get.
This isn't actually too far from what we have now and is a terrible idea.
Below a certain income level in the Australia and parts of Europe (in all probability) you not only pay no taxes but you get low income credits. This is a negative income tax as you describe it.
The problem? Let me give you an example (and this is purely fictional):
Joe earns $5,000 a year in part-time work. He pays no tax. He gets $2,000 a year in government assistance.
Marginal rate of tax: -40%.
Net income: $7,000
Total tax rate: -40%
Joe finds a better paying job and now earns $15,000 a year. Now he's paying $3,000 a year in tax and his low income tax credit is gone.
Marginal rate of tax: 30%
Net income: $12,000
Total tax rate: 20%
Seems reasonable right? Now consider the difference:
Extra gross income: $10,000
Extra net income: $5,000
Marginal rate of tax: 50%
You see this with government benefits (that taper off and then cut out at certain income levels). The marginal tax rate low income earners end up paying can be well beyond 50%. Add in child support and this can go over 90%.
> Income over these amounts reduces your rate of pension by 50 cents in the dollar (single), or 25 cents in the dollar each (for couples). For transitional or saved cases, income over these amounts reduces your rate of pension by 40 cents in the dollar (single), or 20 cents in the dollar each (for couples).
Bear in mind that you're losing 50 cents of tax free income for every $1 of taxable income that you gain.
TA idea is a bit different, the homeless guys are asked what they want. If you just handed them the cash, they'd probably blow it, but giving them a choice makes them think about the future, and how they can improve it.
http://en.wikipedia.org/wiki/Negative_income_tax