Charitable Giving, Tax Expenditures, and Direct Spending in the United States and the European Union
Document Type
Article
Publication Date
2014
Abstract
This Article compares the ways in which the United States and the European Union limit the ability of state-level entities to subsidize their own residents, whether through direct subsidies or through tax expenditures. It uses four recent charitable giving cases decided by the European Court of Justice (ECJ) to illustrate the ECJ’s evolving tax expenditure jurisprudence and argues that, while this jurisprudence may suggest a new and promising model for fiscal federalism, it may also have negative social policy implications. It also points out that the court analyzes direct spending and tax expenditures under different rubrics despite their economic equivalence and does not provide a clear rule for distinguishing between the two, adding to the confusion of Member States and taxpayers. The Article then surveys the Supreme Court’s Dormant Commerce Clause jurisprudence, under which the Court analyzes discriminatory state spending provisions. The Article concludes that although both the Supreme Court and the ECJ prioritize formalism over economic equivalence, the Supreme Court’s approach to tax expenditures is more defensible than that of the ECJ due to the different federal structures of the two jurisdictions.
Publication Citation
39 Yale J. Int'l L. 87 (2014)
Scholarly Commons Citation
Faulhaber, Lilian V., "Charitable Giving, Tax Expenditures, and Direct Spending in the United States and the European Union" (2014). Georgetown Law Faculty Publications and Other Works. 1841.
https://scholarship.law.georgetown.edu/facpub/1841
Included in
Comparative and Foreign Law Commons, European Law Commons, State and Local Government Law Commons, Tax Law Commons