EU-wide anti-racism law

The news that Germany was trying to force its lack of free speech over Holocaust denial, was apparently in the context of an EU-wide anti-racism law. Whilst they have given up on the idea of an EU wide Swastika ban, the rest of it goes on.

Germany's new draft suggests that incitement to racism and xenophobia would be punishable by at least one to three years of jail in all 27 EU states, while leaving to each state to decide on the specifics.

Two questions.

1. In what way is racism an EU problem
2. In a liberal democracy, how can it be illegal to incite someone to think something (as opposed to incite them to do something)

There is nowhere that the EU will not go. Subsidiarity is a word that has no meaning in Brussels.