Equalization Payments

DEFINITION of 'Equalization Payments'

A payment to a state, province or individual from the federal government for the purpose of offsetting monetary imbalances between different parts of the country or between individuals. Equalization payments help create comparable levels of public services, such as education and healthcare, and to supplement disadvantaged individuals with disabilities or low income.

Also known as "transfer payments".

BREAKING DOWN 'Equalization Payments'

In many countries there is a vast diversity between states and provinces in terms of the availability of employment, natural resources, etc. Equalization payments help correct these imbalances by spreading wealth from richer parts of the country to poorer areas, or from richer individuals to poorer ones if a progressive personal tax system is in place.

Although there is no formalized equalization payment program in the United States, many of the poorer areas receive assistance through grants and various social programs. These programs include Medicaid and Social Security.

Equalization payments are commonly distributed in Canada, Australia and Switzerland.

RELATED TERMS
  1. Transfer Payment

    1. In the United States, a payment made to individuals by the ...
  2. Supplemental Security Income - ...

    A federal program that provides additional income for older and ...
  3. Payment Option ARM Minimum Payment

    An option to make minimum payments on an payment option ARM, ...
  4. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  5. Facilitating Payment

    A financial payment that may constitute a bribe and that is made ...
  6. State Medicaid Program

    Health initiatives managed by state governments in conjunction ...
Related Articles
  1. Markets

    The Balance Of Payments

    The "Balance of Payments" is a record of all payments or monetary transactions between a particular country and other nations during a specific time period. It provides a useful glimpse into ...
  2. Personal Finance

    When is a Down Payment Used?

    A down payment is an initial cash payment on an expensive good.
  3. Personal Finance

    The New Tax-Free Savings Accounts For the Disabled

    Due to the Achieving a Better Life Experience (ABLE) Act, many people with disabilities will have an easier time financing their lives, starting in 2016.
  4. Markets

    Fundamentals Of How Canada Makes Its Money

    In terms of industry, Canada is best known for oil and gas production, but the second largest country in the world has quite the diversified economy.
  5. Markets

    Is the Payment Processing Industry Evolving? (PYPL, TGT)

    Learn about the many changes in commerce and payment systems that are happening in the rapidly evolving payment processing industry.
  6. Markets

    How Digital Payments Will Change Commerce in 2016

    The way we transfer and spend money is constantly evolving, and 2016 is poised to expand digital payments like we've never seen before.
  7. Investing

    Understanding the Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  8. Markets

    Disability and Business Overhead Coverage for the Self-Employed

    What every small business owner or professional needs to know about individual and business overhead disability income insurance plans.
  9. Retirement

    Group and Individual Disability Insurance: What You Need to Know

    What you need to know about group and individual disability income coverage.
  10. Personal Finance

    5 Unusual Ways To Come Up With A Home Down Payment

    Many people get shut out of the home buying process because of the down payment. But where there's a will there's a way if you think outside of the box.
RELATED FAQS
  1. Is a deficit in the balance of payments a bad thing?

    Discover how it might be possible to run a balance of payments deficit, what that means in terms of international trade and ... Read Answer >>
  2. What transactions are included in a country's balance of payments?

    Learn about the many types of transactions that are recorded in a country's balance of payments, including the current, capital ... Read Answer >>
  3. What's the difference between Social Security Disability Insurance (SSDI) and Supplemental ...

    Both Social Security Disability Insurance and Supplemental Security Income are administered by the Social Security Administration, ... Read Answer >>
  4. Are my Social Security disability benefits taxable?

    Understand in which situations your Social Security disability benefits are taxable, as well as which states impose state ... Read Answer >>
  5. What are the maximum Social Security disability benefits?

    Find out the maximum Social Security disability benefits for qualifying individuals and couples in 2015, including who is ... Read Answer >>
  6. Are Social Security payments included in the US GDP calculation?

    Understand how gross domestic product is calculated and whether or not transfer payments such as Social Security are included ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center