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

Income intensive groups in particular are the independent workers with a mean taxable
income of 130.426 DM (2,8 times overall mean) as on the top rank of all mean incomes
and those of trading work with a mean taxable income of 101.172 DM (2,2 times
overall mean). As pointed out above, the number of professions are by far the dominant
group of the independent workers ('Selbstandige', Income tax definition). Because of
the different account for the spouse’s situation within the professions and within the
independent workers by the Federal Statistical Office, however, the figures are not
directly comparable. Therefore the total amount of professions with any professional
income here is even greater than the number of independent workers.

Directly comparable is the number of professions with predominant respective any
income from professional work. The mean taxable income of persons with predominant
income from professional work is 119.412 DM. (2,6 times overall mean). The relatively
large number of professions with any professional income and their mean taxable
income of 66.911 DM (1,5 times overall mean) pinpoint the situation of a large group of
professions with relatively low and not dominant professional income compared to their
other sources.

Besides of the employees, the trading persons and independent workers all further
predominant groups of income are relative income non-intensive. Thus, besides our
substantial interest on the 'working people', the aggregate income figures, too, support
our concentration on this further called 'working group' of employees, entrepreneurs (as
from trading and agriculture and forestry) and professions (as a definit part of the
independent workers).

6.2 The Distribution of Individual Net Income of Employees and
Self-Employed (Entrepreneurs and Professions*)

Our interest is to analyze the distribution of a disposable individual income as that part
of income finally individually available for consumption and savings. To operationalize
this idea and concept on the individual level the fixed income tax (the tax to be paid
finally) is subtracted from the taxable income to yield what we further call the net
income of a person. Of course, this is the advantage of analyzing microdata; all
published data from the income statsistics only deal with grouped data of the above
different gross incomes and the fixed income tax to be paid.

As stated we concentrate on the 'working' people consisting of employees and the self-
employed. The self-employed are further divided into entrepreneurs (agriculture,
forestry and trading) and independent workers where the professions by far are the
dominant part of them.

In Table 3 different measures of inequality of the net income distribution are shown.
Overall: there are remarkable differences concerning our three groups, i.e. between the
dependent employed (employees) and the self-employed (entrepreneurs and
professions) in the re-unified Germany 1992.

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