The Distribution of Income of Self-employed, Entrepreneurs and Professions as Revealed from Micro Income Tax Statistics in Germany

Merz: The Distribution of Income of Self-employed, Entrepreneurs and Professions

?? Chemists, chemotechnicians and physicists

?? Artistic professions

?? Other professions (Sonstige Freie Berufe).

A statistic like the Income Tax Statistic is of course subject to changes as the underlying
laws governing it change continuously. The part concerned with Profession is no
exception: Especially in the Income Tax Statistic of 1989 (and in the following 1992) a
number of fundamental changes are reflected:

1. Until this date (1989) the special tables concerned with professions only included
those professions which were eligible for certain exemption due to the fact that they
were self-employed. This legal exemption (Freibetrag) was revoked as of 01. January
1990 which meant that the German Federal Statistical Office had to devise a new set
of criteria with which to distinguish professions from other tax payers. They already
did this from 1989 now defining professions as those deriving income from self-
employed/freelance work - regardless the amount attained (in contrast to a
predominant (überwiegend) income contribution).

2. As a quantifying attribute for professions up to that date all income derived from
freelance work was used including a possible income out of freelance work from the
spouse/partner. This was now split up and only the individual liable to pay tax
concerned and his/her income derived from the reported professional work was
recorded.

3. Up to that date couples consisting of two individuals both involved with professional
work were grouped together without specification of the type of profession practised.
From 1989 onwards the partner with the higher income derived from professional
activity is defining the type of professional activity exercised.

These new regulations valid from 1992 are summarised in the Table 1.

Table 1: New Definitions of Professions (Freie Berufe) (since 1989)

Source:

Federal Statistical Office: Finanzen und Steuern, Fachserie 14,
Reihe 7.1 Einkommensteuer (1989, 1992)

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