The Distribution of Income of Self-employed,
Entrepreneurs and Professions
as Revealed from Micro Income Tax Statistics in Germany
Joachim Merz
1 Introduction 1
2 Measuring Income of Self-employed and Professionals: Problems
and Requirements Encountered 2
3 Income Data from Surveys - The Situation in Germany 4
4 Income and Tax Revenues within the German Tax System:
Overall Results 5
5 Our Data: Income from the German Income Tax Statistic 1992 6
5.1 General Characteristics and Pros and Cons for the Analysis of Self-
employed and Professions 6
5.2 Income and Taxes - Main Definitions 7
5.2.1 General Differentiations and Methodological Issues 7
5.2.2 Determination of Taxable Income 8
5.2.3 Determination of Fixed Income Tax 9
5.3 Socioeconomics: Self-employed, Professions and Employees - Who
are They? 9
5.3.1 Self-Employed 9
5.3.2 Professions, New Definitions in the Recent Income Tax
Statistics 10
5.3.3 Dependently Employed, Employees 12
5.4 Finally: Our Microdata Base of Individual Income and Tax
Information 12
6 Results I: The Income Distribution of Employees and Self-Employed
(Entrepreneurs and Professions*) 13
6.1 Predominant Income from Different Sources - The Overall Picture 13
6.2 The Distribution of Individual Net Income of Employees and Self-
Employed (Entrepreneurs and Professions*) 14
6.3 Redistributional Effects of Taxation of Employees and Self-
Employed (Entrepreneurs and Professions*) 16
6.4 Decomposition of Inequality of Employees and Self-Employed
(Entrepreneurs and Professions*) 18