ABSTRACT
Many European economists identify the need for European Union (EU) tax harmonization and point to the success of the flat tax in countries where it has already been implemented as evidence of its effectiveness. As flat-taxers argued, they are good candidates for tax reform and the benefits of a low flat tax. Just as importantly, however, socio-political factors stand firmly in the way of the flat tax's implementation in much of Western Europe. Sunk costs make the type of socioeconomic activity virtually immovable in the continental European states. The Baltic States, Slovakia, and Russia are relatively newly formed institutional structures still struggling to overcome the communist legacy and to develop their economic capacities to the fullest. Paul Pierson called the European welfare state an immovable object because even though it is in crisis, its opponents lack support in the form of political mobilization and there is high institutional stickiness. The French protests over youth labor laws improve youth employment.
