revenue sharing

Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. Laws determine the formulas by which revenue is shared, limiting the controls that the unit supplying the money can exercise over the receiver and specifying whether matching funds must be supplied by the receiver. Forms of revenue sharing have been used in several countries, including Canada, India, and Switzerland. From 1972 to 1986 the U.S. pursued a revenue-sharing program in which state and local governments received federal funds to spend as they saw fit.

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System by which employees are paid a share of the profits of the business enterprise in which they are employed, in keeping with a plan outlined in advance. These payments, which may vary according to salary or wage, are in addition to regular earnings. Profit-sharing plans were probably first developed in France in the early 19th century as worker incentives. Today such plans are used by businesses in Western Europe, the U.S., and parts of Latin America. Profit shares may be distributed on a current or deferred basis or through some combination of the two. Under current distribution, profits are paid out to employees immediately in the form of cash or company stock. In deferred-payment plans, profit shares may be paid into a trust fund from which employees can draw annuities in later years.

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