How are individual tax rates structured according to the Green Book?

The structure of individual tax rates according to the Green Book is progressive, meaning that higher income levels are taxed at higher rates. This system is designed to ensure that taxpayers contribute a fair share based on their ability to pay; as individuals earn more income, they ascend into higher tax brackets with increasing rates. This approach reflects the principle of vertical equity in taxation, where those with greater financial resources are expected to shoulder a larger burden of tax obligations, contributing to government revenue and funding essential public services.

The progressive nature of the tax system aims to reduce income inequality by imposing heavier tax responsibilities on wealthier individuals, which can help finance social programs and public goods that benefit society as a whole. Other structures, such as flat rates for all income levels or proportional rates based on business type, would not achieve the same equity goals and would result in an unequal distribution of tax burdens relative to income.