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Can setting the income tax rate above the revenue-maximizing tax rate (Laffer rate) lead to a Pareto-efficient allocation?

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Generally no. In fact any tax by definition will not be Pareto optimal. Pareto optimality is a point where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss of welfare.

So generally speaking it’s not possible to have any tax even on the left side of Laffer curve to be Pareto optimal. That would only be possible in special case if some individual has zero marginal utility of income or if we are talking about lump-sum (otherwise there is efficiency loss) taxes that fund some public good that all enjoy.

However, you should not confuse Pareto optimality with social optimality or social welfare. Taxes on the right side of Laffer curve can be socially optimal in cases where there are some special circumstances (eg negative externality) or in case government has punitive social welfare preferences where it does not care about redistribution but just punishing high income individuals.

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    $\begingroup$ Arguably, there can be no partial equilibrium treatment of Pareto optimality. Welfare in partial equilibrium models is usually treated via surplus. $\endgroup$ Jan 5, 2022 at 16:58

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