Governments should consider having more policies that support middle-income earners, according to Kevin Jordan, vice-president of national programmes at US-based Local Initiatives Support Corp (LISC).

“Building a successful middle class is the key to a successful national economy. Countries need specific policies that help the middle class be prepared for bad economic times and to do well when the economy is strong. Without a strong middle class, consumer demand suffers and thus production is lower. 

“But the middle class can be financially vulnerable to the ups and downs of capitalism,” said Jordan, who does financial coaching.

Such policies will serve as an inspiration for low-income earners to upgrade themselves and join the middle-income group to benefit from the incentives provided by the government. 

“[In the US] not much money is allocated for low-income earners, except for wage subsidies and food stamps to help pay for food,” he added.

Jordan was speaking on the sidelines of the Citi-FT Financial Education Summit 2014 held in Kuala Lumpur on Nov 5. He was in town to speak on how financial planning and management is essential for building financial stability in households.

In the US, he said, the government allocates more financial resources for the middle-income group than for low-income earners. One example is the housing tax credit programme, where middle-income earners get a mortgage interest tax deduction, or a deduction on the taxes they owe the US government. 

Under this programme, home buyers are allowed to reduce their taxable income by the amount of mortgage interest they have paid in that year. 

“This deduction saves Americans US$100 billion (RM335 billion) in taxes each year, which is money middle-class families can use to build assets,” Jordan said, adding that middle-income earners can also claim funds for education, whether it is for themselves or their children. 

According to Aaron Pacitti, an assistant professor of economics at Siena College in Loudonville, New York, the middle-income range is between US$39,764 (RM132,970) and US$64,582 (RM215,982) a year, reports money.usnews, a US news portal.