Abstract
This article assesses wealth neutral grants within the traditional framework of the fiscal federalism. Discussions of the concept of fiscal equality or District Power Equalization (DPE) have centered largley on local control, and have defined equity as a problem of the comparison of local jurisdictions. The individual resident and the state government lie on either side of the locality in terms of collective decision-making, yet the perspective of neither of these sides has been adequately considered in past studies. These grants can cause substantial redefinitions of revenue responsibilities among various levels of government; they do far less than is commonly assumed to provide horizontal equity; and they do not relieve problems of location bias. We find that none of these problems, either individually or collectively, constitute an indictment of these grants, but their careful consideration offers a more balanced view of DPE than any yet offered
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