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

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