FEDERAL TRANSFERS IN CANADA AND THE UNITED STATES, 1989-1990 TO 1998-1999: HOW EQUALIZING ARE THEY?

Equalization can occur as the result of an explicit policy decision or through the various features of transfers that do not have, as such, an equalization mandate. Indeed, the presence of an equalization grant does not necessarily render the overall system equalizing, since other transfers may be c...

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Bibliographic Details
Published in:Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association 2002-01, p.203
Main Authors: Laurent, Stephen, Vaillancourt, François
Format: Article
Language:English
Subjects:
Comparative analysis
Cross border transactions
Economic development
Economic impact
Fiscal policy
GDP
Gross Domestic Product
History
Income taxes
Lump sum
Medicaid
Per capita
Personal income
Studies
Tax rates
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Summary:Equalization can occur as the result of an explicit policy decision or through the various features of transfers that do not have, as such, an equalization mandate. Indeed, the presence of an equalization grant does not necessarily render the overall system equalizing, since other transfers may be counter-equalizing. This paper examines federal-provincial/state intergovernmental transfers in Canada and the United States during the 1990s to assess whether or not these systems have an equalization impact. The paper is divided into two parts: 1. transfer systems and interregional disparities, and 2. evidence on the extent, if any, of equalization. Interregional disparities and receipts of transfers by subnational entities are described. Results show that Canada's transfer system overall is equalizing, and the provinces with the lowest fiscal capacities clearly benefit the most from federal grants on a per capita basis, while the United States transfer system is not equalizing.
ISSN:1549-7542
2377-567X