Merz: The Distribution of Income of Self-employed, Entrepreneurs and Professions
The Income Tax Statistic provides information for several occupational groups with
special tables about selected professions. Of course these tables do not present all of the
single professions but the most significant groups (14 groups finally) are represented.
The data is available for the public in grouped form. Information about number of cases
and different types of income in brackets are available. Most of all and of particular
importance for the self-employed, all necessary information to calculate the final taxes
and thus the final and ‘real’ income situation are included.
In spite of the above mentioned major advantages, the German Income Tax Statistic
also has their disadvantages like:
Income Tax Statistics provide no data basis which is very up-to-date, e.g. the data about
1992 was published in 1998. The Periodicity amounts to 3 years therefore data is never
available annually. Especially for analysis of time series, which presupposes long time
series, this is a serious deficit. Connected with this, changing tax laws make long termed
analyses difficult; but this holds for other surveys as well.
The available grouping of professions is not unproblematic. Whereas the division
between the legal-, business- and tax-consulting professions and the natural-sciences
professions are ‘sufficiently’ covered, this does not apply to the large remaining group,
summarized by the so-called 'other professions'. Here a further disaggregation grouping
is very desirable.
However, the income data for the self-employed including the professions in particular
provided by the German Income Tax Statistic fits the discussed substantial requirements
in an almost ideal way. Besides that, in general it is the best data base at hand in
Germany.
5.2 Income and Taxes - Main Definitions
From the abundance of single piece information available from the income tax statistic
we will in the following only regard those terms stemming from tax law and
delimitations from income tax statistics which are relevant for the income discussion at
hand.
The central income term for our analysis is the taxable income as well as the fixed
income tax. Roughly speaking the taxable income is calculated according to different
additional and deductible amounts of the initial income situation as the sum of all
income (Summe der Einkünfte) derived from seven income types. Via the total income
Gesamtbetrag der Einkünfte), the individual income (Einkommen) thus finally resulting
in the taxable income (zu versteuerndes Einkommen). By means of the tariff income tax
(tarifliche Einkommensteuer) and with further considerations is finally the individual
fixed income tax (festgesetzte Einkommensteuer) calculated.
5.2.1 General Differentiations and Methodological Issues
Income tax liable persons: A natural person is unlimitedly liable to pay income tax if
he/she usually stays in Germany or has his/her normal place of residence here. The
unlimited tax liability applies to all forms of income, those derived inside and outside
the borders of Germany. If a natural person has neither a usual place of residence nor