Payroll tax cut standoff's impact: What $40 a paycheck means to you
December 22nd, 2011
09:53 AM ET

Payroll tax cut standoff's impact: What $40 a paycheck means to you

House Republicans on Tuesday rejected a Senate deal to temporarily extend the payroll tax holiday, leaving the White House and Congress at an impasse and creating a showdown between President Barack Obama and House Speaker John Boehner.

The tax cut is set to expire on December 31. Ending the tax break would cost the typical family about $1,000 a year, or $40 per bi-weekly paycheck for those who earn about $50,000 a year.

With frustration on both sides of the aisle, President Obama and the White House took to social media, hoping to get the public on their side in a public relations showdown with the Republican Party. The White House asked Americans what $40 means to them in an attempt to help put pressure on Republicans to pass the measure.

You responded in force on Twitter using the hashtag #40dollars.  President Obama said that the White House received more than 30,000 responses to their query.

That's perhaps why President Obama is expected to make a statement Thursday on the partisan standoff over how best to extend the expiring payroll tax cut, according to the White House. Obama will be joined by "Americans who would see their taxes go up if the House Republicans fail to act," the White House said. Some of those people have participated in Obama's social media campaign.

There was one surprise user of the hashtag: Speaker Boehner. But he used it to put things in his perspective, trying to explain why Republicans were right to try to work out a longer term deal.

So, with all of the bickering and the debating, we wanted to know if you agreed that $40 is a significant amount of money. We asked you if the end of the tax cut affect your family or if it would have little difference in your daily life. Here's what you said:

Selena Campbell is a 21-year-old from Orlando, Florida, who works in Admissions Control at Full Sail University. She said that the money she may be losing each paycheck would help buy new shoes for her husband. He has to walk to work every day because they can't afford a second car. But Campbell said that isn't the only thing it would help out with.

"For me and my family, $40 is $10 less than what we pay for groceries every week," she said. "There have been weeks, where we have only been able to spend $10 on groceries and have lived off of mac 'n' cheese and hot dogs."

Selena Campbell said the lost money would have helped with grocery and medical costs.

That money would also determine whether they could fully pay for their rent or car payments. It would also impact their healthcare, she said.

"$40 is what it costs for my medication so I can be a healthy wife, sister, daughter, mother," Campbell said. "$40 a month, in the economy we are in right now, is everything."

Tiffanie Young, a supervisor at a small rural hospital in Seaside, Oregon, says she saves $50 per paycheck for emergencies. The end to the payroll tax break would mean "I would probably have to stop doing that." She said that for a lot of people $40 could help pay for groceries, gas and other necessary bills.

But not everyone thought the delay would really impact them. And some people said they agreed with Republicans that a two-month extension wouldn't help.

Ryan Stoddard responded on Facebook that he felt just $40 a paycheck would mean "not much" to him and also agreed with House Speaker John Boehner that a short solution wouldn't help.

"Two months is a band-aid, not a solution," he said. "The Speaker is correct in his decision to call for more action."

Joel Jamison Bliss said on Facebook he was tired of seeing the story portrayed as "Republicans doing this to hurt the American people."

"A two-month extension does nothing and you know it ... this is another political ploy by Obama and more campaigning, which is all he has done for four years anyway," he said.

But Denise Mooren, a 36-year-old senior account who lives in Athens, Alabama, said her family would feel the hurt from the loss. Though it may seem like a small amount of money, Mooren said it is a "magical amount" in her household as she tries to make ends meet for her family of eight people.

"I pay $40 every two weeks for all the kids to buy their lunch, and I make them pack it the rest of the time," she said. "I had to purchase a Sam's Club membership just to make lunch items affordable for 15 lunches per week for three 11-year-olds, one 12-year old, and one 15-year-old."

She also said she needs that money for one of her children who has Attention Deficit Hyperactivity Disorder (ADHD)

"I pay $400 per month for insurance," she said. "The co-pays all went up double to $40 per visit. My daughter has to go at least 6 times per year."

One CNN reader, Jaimie, commented at how surprising it was to see people's bad finances and thought they were placing the blame on politicians.

"People need to learn how to budget, if you're seriously hurting for this $40 a month, you need to look at your finances," Jaimie said. "Don't blame the politicians for a lousy $40 a month. I support my wife and 2 kids off of one income and I make $30,000 a year, and we are never hurting. I set a budget and I keep it. Start a savings account for emergencies like these. Wake up people!!

Jennifer Alvich, a 36-year-old high school history teacher in Weehawken, New Jersey, said she is fed up with how politicians have handled many situations regarding her economic situation. The extra money she may not be getting each paycheck could pay for her bills, gas and groceries, Alvich told CNN

“I’m tired of reading about politicians who make decisions about the little money I have,” she said.

She said politicians are too focused on party lines and need to work together and stop hurting the middle class.

“This is about Americans getting through the year,” she said.

Melissa Matthews, a 32-year-old a stay-at-home-mom from Leander, Texas, said she works a job from home at night while her children are sleeping and her husband works two jobs.

Melissa Matthews is frustrated that the House has not passed an extension.

She said her husband just found out from his employer that he will be out $80 in January because of the standstill in Congress.

"They are messing with my family who can barely make ends meet," she said. "I am just very upset at the way the Republicans in the House are trying to manipulate this bill and get their way on other issues by threatening to take the payroll tax cut away. The extension needs to be passed and the other issues need to be worked out later. There is no more time to argue the issue. I appreciate the Senate passing the two-month extension and I want the House to do the same."

One commenter on our story, Gary, echoed a statement that many others made in response to some of the frustrations of possibly losing out on $40 a paycheck. He questioned whether everyone who was complaining was doing enough to live within their means.

"If this is a lot of money for you, cancel your cable bill and ditch your internet service. Get TV through the Air and internet at the library. I just saved you 120 bucks a month," he said. "Stop blaming the government for not helping you and look at what you can do to help yourself."

Frequent iReport contributor Egberto Willies says the payroll tax cut wouldn’t affect him personally because he works for himself as a software developer in Kingwood, Texas.

But he said everyone getting $40 could mean the difference between the “economy surviving or going back into a recession.”

Frequent iReporter Matt Sky, fromNew York, said the money would help in opening up the economy a little by allowing middle class American to pay off debt, car payments or buy groceries.

“The $40 bi-weekly would mean a lot for working class Americans," he said. "Wealthy folks, the tax breaks don’t really mean as much because they basically already have a lot money to meet their expenses."

Cindy Riley is a 54-year-old homemaker living in Center Point, Alabama. She said that $40 a paycheck for her family would help pay for several utilities or bills.

"$40 pays for our car insurance for a month. I can't cut that out, the law requires it. $40 pays for our water and sewer for two weeks. I can't cut that out either unless I want to start hauling water from the creek and build an outhouse," she said. "$40 will buy my vegetable garden seed for next spring. I suppose I could cut that out, but that would cost more in the long run, both in terms of health and just food.

"$40 pays for the Internet access for a month, and I suppose I could cut that out, but we have no other entertainment and I use it to pay all my bills and stay in touch with my family so that I can save the price of stamps. $40 pays for my pay-as-you-go phone for about four months. Can't cut that out, It's the only 'phone we have, we cancelled the landline long ago."

The money would also help with a new prescription she has to take, feeding her cats, health care for her family and the pets, or gas for her husband to get to work.

"We're about at the bottom of the barrel here," Riley said. "No, we've gone through the bottom of the barrel and it's really, really leaking."

We also put the question to our Twitter subscribers online, and you answered in force. Many of you said it could help with several small bills you had. Here's some of the responses you tweeted using the hashtag #40dollars about how much the money would or wouldn't help.

What do you think? Would $40 impact you and your family, or would it barely impact you. Let us know by sounding off in a video on CNN iReport here. We'll be adding your thoughts throughout the day.

soundoff (1,741 Responses)
  1. Carl

    $40 so you can buy a new pair of shoes to walk to work. It must be a long walk if you need $40 every two weeks for new shoes. I think $40 does matter to lots of people but sorry that is a huge reach for sympathy.

    December 21, 2011 at 1:59 pm | Report abuse |
  2. bill

    bobcat. It's 40 a month, not a week. That comes out to $10 a month. Most people have cell phones they don't have or buy triple decaf no foam fat free lattes every day. The majority of Americans don't even care about the $40 a month. It's actually the democrats that won't extend it longer then two months. The republicans want it in place on a long term basis and the dems won't budge.

    December 21, 2011 at 1:59 pm | Report abuse |
    • Chris

      It says "$40 per paycheck" or "$1000 per year".

      $40 x 12 does not equal $1000

      December 21, 2011 at 2:06 pm | Report abuse |
    • Sherri

      payperiod, not month.

      December 21, 2011 at 2:08 pm | Report abuse |
    • Mike

      Roughly $40 every two weeks Bill, as most folks get paid bi-weekly. $40 x (52/2)= $1040 per year . It would actually only be $38.46 a paycheck since it's a $1,000 cut but $40 sounds better.

      December 21, 2011 at 2:13 pm | Report abuse |
    • bill

      Their math is funny. The average American gets paid about 30K per year, or 60K per household. 30K times .02 (or 2%) equals $600 per year which comes out to $50 a month or $25 per household). In my opinion, they are doing fuzzy math.

      December 21, 2011 at 2:13 pm | Report abuse |
    • Kwame

      Actually, read the article again, it's $40 a paycheck. Most people get two paychecks a month. The total for the month will be $80. That amount is significant for most Americans rich, middle, or working class especially if you are trying to save money.

      December 21, 2011 at 2:13 pm | Report abuse |
    • Jay

      Bill & Chris...it says $40 per paycheck. Most people get 2 paychecks a month, plus an extra paycheck on 2 months of the year...so the math should be $40 x 26 = $1040.

      December 21, 2011 at 5:29 pm | Report abuse |
    • douglas mcdonald

      Bill, glad you re smart enough to due the math, most everyone commenting are not even paying attention to the cost, just the hype. Media is promoting it, i'm sick of them and Harrry Reid and Pelosi.

      December 21, 2011 at 6:52 pm | Report abuse |
    • Lizzie43

      Its called the new math under the democrats.

      December 22, 2011 at 1:12 pm | Report abuse |
  3. Rob

    Does everyone not realize that sooner or later this "temporary tax cut" will end eventually? I'm also guessing 90% of the posters above get Tax Refunds each year. You do know you can adjust what the Feds withhold and add that $40 back to your take home pay, right? You will get a smaller refund, but really you should want exactly $0 in a tax refund, that is your money you are electing to let the Government keep from you for up to 1 year.

    Adjust your withholding people, it is a simple solution. If you get a $1200 refund each year, that could be an extra $100/month in your pocket NOW!

    December 21, 2011 at 1:59 pm | Report abuse |
    • Carl

      figuring witholding....that requires math skills

      December 21, 2011 at 2:02 pm | Report abuse |
    • AMJ

      Not true. This is coming out of Social Security.

      December 21, 2011 at 2:04 pm | Report abuse |
  4. Leroy

    Lets see if congress will give up their raises just before christmas to tax increases, just like millions of people are going to give up thier yearly wage increases to taxes.

    December 21, 2011 at 2:00 pm | Report abuse |
  5. AMJ

    This 2% tax cut was implemented last year with no grand announcement. A vast majority was not even aware it had happened. So instead of this being a temporary economic stimulus, it has become expected income in every family's budget. But what annoys me the most is that this is a reduction of Social Security collections - wasn't this program predicted to fail in the near future, and now there is less money for it. Is this logical?

    December 21, 2011 at 2:02 pm | Report abuse |
  6. Josh, Michigan

    I have learned my lesson. The "Great Unifier" I elected has presided over the most divided government I have ever seen. I acknowledge $40 is a lot to most people but a 2 month solution is a joke. Get something done to cause some confidence! 2 months from now we will be back at square one fighting over a road, bridge, pipeline, or longer unemployment benefits AGAIN? Seems like the Congress, Senate, and President want these quick fixes to win points in the public.

    40 dollars is worth spending to get something done in the white house, vote them all out.

    December 21, 2011 at 2:03 pm | Report abuse |
    • MikeG

      Agreed on the temporary fixes what's the point? Government gets nothing done because rather than sit down and say something like "Realistically it will be at least 2 years before we recover, so here's a plan for a program that over the next 2 years will help out people as we get them back to work" it becomes "here's this months rebate see you next week to talkeabout the next month for 3 weeks". The same issues get brought up and debated over and over again when very little has changed in order to expect a different outcome. Is the UI rate any lower (hardly any), is social security much different than it was a year ago (nope still broke in ~15 years) so why the big debate? Either you say things in the future are really important and we need to balance our budget, which means dropping all tax deductions and reducing some spending, or you say we'll work on that AFTER we recover (which implies if we haven't recovered than we still should be in the recovery policy). Pick one, don't stick with a plan for a month and than debate it again.

      December 21, 2011 at 3:43 pm | Report abuse |
  7. Chris

    $40.00 a month can be a lot for some families. My family it would be considered a nice chunk. And would this come out of both paychecks. (Husband+Wife).. That is like $1,500+ a year taken away. People need that to live, minimum wage is horrible now adays. One thing after another this country will not last much longer if things keep going like this. :(

    December 21, 2011 at 2:03 pm | Report abuse |
  8. a slozomby

    $40...... national debt is $48,000 per american . lets worry about that.

    December 21, 2011 at 2:04 pm | Report abuse |
  9. Heidi

    $40 pays for my monthly utility bill on budget billing, 40$ is a week of groceries for me

    December 21, 2011 at 2:05 pm | Report abuse |
    • BEZZY

      Thank you for say this. $80 per month ($40 per check) is a lot to me. I am already struggling to make ends meet and I am not living beyond means.

      December 21, 2011 at 3:20 pm | Report abuse |
    • Lizzie43

      If you make $50000 a year and you consider $40 a nice chunk you better reevaluate your spending

      December 22, 2011 at 1:16 pm | Report abuse |
  10. duh

    I understand for our elected officials and their rich puppetmasters that this is a miniscule amount but for us average folks it cuts into medical co-payments which have gone up substantially, road tolls (which have nearly doubled here in MD to $50 month for me), gas, utilities and on and on. $40 every two weeks or $80 a month is my life insurance. should I cut that out? I don't care if someone succeeds and becomes wealthy but our wages have not increased 300-400 percent in the past few decades. I wish it did. I'll be lucky to get thrown a 2% cost of living increase every couple of years.

    December 21, 2011 at 2:06 pm | Report abuse |
  11. Judahsgirl

    This further reiterates how out of touch congress is with reality. $40.00 on top of taxed groceries, gas, communcation methods, state and local taxes is slap in the face to hardworking people. While they continue to funnel millions of dollars a year into projects most Americans will never hear about. How offensive I find it that they don't understand what a difference $80 or $120 (some months) would make in the homes of average families!

    December 21, 2011 at 2:06 pm | Report abuse |
  12. IRsmart

    These comments are all misguided. $40 is a tank of gas for a multimillionaire too... Just because you can put an item value on the amount does not mean you will go without that item if you don't get that amount. The multimillionaire will just buy gas with a different $40 and the less fortunate individual may have to spend less on eating out in order to buy that tank of gas... I highly doubt that all these people are not going to buy gas for their car should they keep their $40; in reality they will juggle costs and cut back on something else... so in reality the $40 is eating pre-cooked Tyson chicken instead of cooking from the butcher, or seeing a movie with the family, or buying brand name instead of generic goods.

    December 21, 2011 at 2:06 pm | Report abuse |
    • Sherri

      But it's back to someone is making that decision for us now... determining our paycheck and then expecting us to figure out how to survive.

      December 21, 2011 at 2:10 pm | Report abuse |
  13. Melanie

    so what you are saying is, the raise that i just got for working so hard this year for, just went up in flames because i now will not see any type of increase to my paycheck because instead of it coming to me, it will go to the government. thanks a lot Mr. President. I'm so glad I worked my tail off this year to get nowhere.

    December 21, 2011 at 2:08 pm | Report abuse |
    • Sherri

      unfortunately that's about every middle class American.. IF we got a raise, it's gone to either gas or taxes.

      December 21, 2011 at 2:13 pm | Report abuse |
  14. taxed

    That is $40 not going into the Social Security fund that everybody knows is going broke. Is that how Obama fixes it – buy putting LESS money into it? I can't believe the Republicans want to slow the money into the SS fund even more than the Democrats. They are all nuts and anti-senior.

    December 21, 2011 at 2:08 pm | Report abuse |
  15. NOT MY CHAIR

    these people are stupid.... i am sorry, how about a life plan? like oh maybe we cant afford to have children? maybe we shouldn't have bought those pets? if forty dollars makes or breaks you did something wrong. i agree with passing the payroll tax cut, but come people make better life choices.
    $40 out of my paycheck would mean i drive to PA to buy my tobacco. people need more than $40 to help stimulate the economy

    December 21, 2011 at 2:08 pm | Report abuse |
    • Sherri

      or maybe something happened to derail their life plan.. but of course that doesn't happen. People are just lazy and expect to get paid according to the way you think.

      December 21, 2011 at 2:11 pm | Report abuse |
    • Judahsgirl

      If I walk past a penny on the side walk, I pick it up...Why? because I value every penny I can earn or save. $40.00 will not make or break my household, but darn it if it wouldn't help it! Sure congress has pizzed away trillions of dollars, let's give them more to pizz away. This messed started well before the Obama Administration too. So if people would stop being so selfish and think about the fellow Americans this would HURT, then maybe we would much farther ahead rather than behind. A single mom's $40.00 is not the same as a two working household. Should I not care about her/him just because I can do without it? Silly people!

      December 21, 2011 at 2:20 pm | Report abuse |
    • Vetman

      These commenters clealyr need every dollar they can get, and you seem more like the stupid one here. The smart people gave up tobacco a long time ago. It is the higher income people who will continue to have $176 a month more if the 2% tax holiday continues and they will be the ones stimulating the economy and indirectly helping you to keep your job (so you can waste $40 a patcheck on smokes).

      December 21, 2011 at 8:29 pm | Report abuse |
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