Why should the central government be in the business of giving unconditional grants to states and localities? The usual response is that such grants can equalize the income distribution. It is not clear that this argument stands up under scrutiny. Even if a goal of public policy is to help poor people, it does not follow that the best way to do so is to help poor communities. After all, the chances that a community with a low average income will probably have some relatively rich members and vice versa. If the goal is to help the poor, why not give them the money directly?

Chapter 20, Public Finance in a Federal System, p. 501 - Public Finance - International Edition - Sixth Edition