Explaining policy change in EU corporate tax policy with the Multiple Streams Framework

In this paper, I summarize the findings from my PhD thesis in which I used the Multiple Streams Framework (MSF) to investigate processes of policy change in EU corporate tax policy since the 1990s. Traditionally, EU corporate tax policy aimed at eliminating market distortions created by tax obstacles and double taxation, and thus followed a classical logic of market-making negative integration. This changed in the aftermath of the financial and Eurozone crises and after the range of prominent tax scandals, such as Lux Leaks and the Panama Papers. Increasingly, the EU tax agenda included market-correcting provisions designed to tackle tax evasion and corporate tax avoidance by promoting tax transparency and tax fairness. Adopted in December 2022, the directive implementing the worldwide introduction of a minimum corporate tax rate of 15% is the latest example of this policy change. To explain this policy change, the paper adopts the MSF while paying particular attention to the role of ideas in shaping the definition of policy problems, the specific content of policy proposals and the ‘construction of reform imperatives’. Methodologically, it follows an explaining-outcome process-tracing approach, which was based on a quantitative content analysis of official EU documents and 14 semi-structured expert interviews. Empirically, it provides an overview of the developments in the problem, policy and political streams in three different time periods: before the financial crisis, immediately after the financial crisis, and since the Juncker Commission. For each period, it identifies the causal mechanisms leading to policy change according to the MSF, namely whether and why a window of opportunity emerged, which actors functioned as policy entrepreneurs, and to what extent coupling successfully occurred. At the same time, it also reflects on the constraining factors that may be responsible for the limits of policy change. In terms of original contribution, the paper systematically and rigorously tests the hypotheses of the MSF in EU tax policy - a policy field that has been rather unexplored so far. Additionally, it provides new insights into elements, which tend to be neglected in empirical applications of the MSF, most importantly the interaction of the EU with the international context in both the policy and political streams, and the role of the media and politicization in windows of opportunity and coupling processes.