Article on Charitable Giving
The recent European Union proposal to bring about a more uniform body of law governing choice of law and related issues in international inheritance cases is, perhaps, a necessary response to the increasing international nature of the EU’s (and the world’s) inhabitants and their assets. As written, though, it is rather heavily tilted toward the civil law values of continental Europe and threatens to collide jarringly with common law traditions, in particular the U.S. fondness for trusts and charitable giving.
Different cultures of philanthropy exist in the United States and Europe, especially continental Europe. The people of the United States contribute nearly 2% of the country’s GDP to charities each year, a rate four or more times as high as that in most of continental Europe. The existence of a charitable-giving deduction in the U.S. tax code is often cited as a reason. But that by itself seems insufficient: the tax code provides no incentive to the low-income families, who donate an even higher proportion of their income to charity than their wealthier compatriots, and little incentive to the wealthy, whose tax relief from charitable contributions may be limited. In fact, a 2006 survey of the wealthy donors found most of them claiming that the presence of absence of tax incentives had no effect on their decisions. Nor do broader cultural factors seem sufficient to explain the disparity. Notwithstanding the delight Americans and Western Europeans take in discovering and exaggerating their respective cultural differences, in reality the differences are not that great. And while the level of government-provided social services is higher in most European countries than in the United States, that does not eliminate the need for domestic charitable giving in those countries and should have no effect on international giving.