Final answer:
The top 1% of income earners in the US in 2017 paid an average federal tax rate of 25.4% with an effective tax rate of 20.4%, while the bottom income groups at times paid negative effective income taxes due to tax credits. This demonstrates the progressive nature of the US federal income tax system where high earners pay a higher percentage than low-income earners.
Step-by-step explanation:
The subject of this question pertains to the federal income tax system in the United States and how it is structured to be progressive, meaning higher income earners pay a larger percentage of their income compared to lower income earners. According to data from household income tax returns, in 2017, the top 1% of households, with an average income of potentially around $1,679,000, paid an average federal tax rate of 25.4%. However, their effective income tax rate, considering all sources of income, was about 20.4%. Meanwhile, lower income groups, particularly the bottom two quintiles, sometimes paid negative effective income taxes due to tax credits like the earned income tax credit. Despite some news stories highlighting high-income individuals who pay little in taxes, the Congressional Budget Office confirms the pattern that those with higher incomes contribute a higher average share of their income to federal income taxes.