revenue sharing

/ˈrɛvəˌnu ˈʃɛrɪŋ/

Revenue sharing is when the government gives part of the money it makes from taxes to other areas or branches of government.

The federal government can use revenue sharing to distribute tax income to states, and state governments can do the same, sharing their revenue with local municipalities. In the U.S., an official policy of revenue sharing, signed into law by President Nixon in 1972, lasted for 14 years. It funneled tax dollars directly to cities and towns; when it ended, those local governments had to raise their own taxes or cut services. Revenue means "income."

Definitions of revenue sharing

1. noun

   distribution of part of the federal tax income to states and municipalities
   type of:

   distribution

   the act of distributing or spreading or apportioning