Palau’s Middle Class Carry A Big Load

By Jackson Henry —-

One of America’s most admired economic miracles is its creation of a large middle class. It is them who shoulder the bulk of America’s taxes and their spending habits keeps money circulating around which helps bolster the US economy. However, politicians often times downplay the importance of the middle class folks. It is no wonder why President Obama said, “Romney does not understand the heavy load the middle class is carrying”.

The definition of middle class varies by people in different disciple. The common one we hear is, “they are the group between the high and low economic classes”. But my favorite definition is, “people who can afford to buy anything on TV”. Economists characterize the middle class as the group who hold college degrees, are financially independent, hold professional skills, own their own homes, are medium size business owners and earn substantial income to support a lifestyle and a comfortable living standard. Michael Foster says that America’s middle class pay 40% of the nation’s taxes (1990 data). This group’s classification is based on their final disposable net income estimated at $67,000 annually


Here in Palau, it is bit difficult identifying what income bracket the middle class falls in due to poor collection of financial and statistical data. Nowhere is Palau close to America’s middle class by any stretch of the imagination. But if I was to take a stab at it, I say any Palauan earning an average of $24,000 a year, have some college training, have a marketable skill, own a house or land, a boat and can afford a vacation overseas annually. That figure is an offshoot from Palau’s present $8,500 average per capita annual income. I estimate that our middle class account for at least 30% of our local tax revenue source. That is why one Rukak said, “nothing wrong for the candidates identifying themselves with the so-called grassroots. But please give credit to the middle class folks who carry a big load of our nation’s economic burden on their backs”.

Palau’s middle class do carry a big chunk of Palau’s economic load. It is their skills, work ethic, educational level and taxes that help fill up our government’s kitty. For the small and medium size enterprises, it is their risk taking and managerial skills that produce jobs and business GRTs quarterly. However, their contributions are sometimes downplayed or overly misunderstood.

It is a noble act to take care of the lower class income earners and to provide economic assistance to those of fell off the “economic wagon”. But it would be a mistake to over look the middle class who are the “revenue drivers” of our republic. Their contribution to our economy is conspicuously observed by the shops they operate or the high profile actions they take to improve the lives of just about everyone living in Palau.

As Congresswoman Murray said, “do not take the middle class as hostage as means to extort more money to pay for the government. Give them the slack they deserve”.

Economist Clyde Freeman reinforced this statement by saying, “A nation that creates a large middle class is a nation sowing the seed of prosperity”.

Middle class Palauans and SME business owners do not need a care taker government to look after them. Instead, they want better opportunities, friendlier regulations, a level playing field, friendlier foreign investments climate and support from the regulators to lighten up the economic load that they are carrying for the country.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: