The greater empirical backdrop of this thesis is the apparent paradox of why the flat tax has not been adopted in any Western European country, while it has been implemented in many Central and Eastern European countries. Limiting my scope, I explain how Estonia became the first European country to introduce the flat tax under the Laar 1 government and why the same proposal was not chosen when Norway underwent a tax reform under the Bondevik 2 government.
My theoretical ambition is to incorporate the explanations of the path dependence theory into the Multiple Streams model. My claim is that what Kingdon (1984) calls “survival criteria” in the “proposal stream”, which I shorten down to value acceptability, technical and political feasibility and budgetary implications, provide the path dependence theory with a direction in which to search for the existence of mechanisms that inhibit change. The path dependence theory, on the other hand, provides the Multiple Streams model with an explanation of the forces that make the existence of a "policy window" and the coupling of the problem, proposal and politics streams by a "policy entrepreneur" necessary conditions for radical reform. I argue that whether or not a proposal is adopted depends on the extent to which these conditions are fulfilled, that is, the seriousness of the problem that the proposal is coupled to, the extent to which it fulfills the three survival criteria, the favorability of the political conditions, the centrality of the policy entrepreneurs and the size of the policy window.
The case studies show important differences in the two countries in all of these seven conditions. The survival criteria were clearly influenced by path dependence mechanisms and proved to be important obstacles hindering the adoption of the proposal in Norway, while the short experience with progressive income taxes meant that these mechanisms were of little importance in Estonia. The proposal’s chances of adoption were in Estonia enhanced by it being coupled to a problem perceived as extremely serious, the fact that the most important policy entrepreneur was the prime minister, and the existence of an extraordinary large policy window, caused primarily by what I choose to call the "limited attention" mechanism. In Norway the problem was attempted coupled to a problem not considered serious enough to justify a radical reform, the proposal lacked a well placed entrepreneur who was willing to invest time, energy and reputation, and the policy window for reform was considerably smaller.
Case studies of two countries do not provide results that are generalizable to the whole universe of European states. However, many of the features that made it difficult to introduce the flat tax in Norway are common to most Western European countries and the transition from Communism means that the Central and Eastern European countries also share many of the same characteristics that made it possible to introduce the reform in Estonia. I therefore argue that my findings are relevant also to the understanding of the greater empirical backdrop.