Economics
Mechanisms of Fiscal Federalism and Transfer Payments
Quick fact
Most of the world's federations—like Canada, Germany, and Australia—use equalization transfers so that poorer regions can provide similar public services without charging much higher taxes than richer regions.
Why this is interesting
When you pay income tax, you might think that money goes straight to your local school or hospital—but often it takes a detour through the national capital first. Why does your money take a round trip?