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. MichiganMoon

    A person making Minimum Wage would save $5.80 per week or LESS than $50 during the 2 months. The top 10% would get well over half of the tax savings, while Social Security (something the poor need more than the rich) would lose $10,000,000,000.00 to pay for this. If we paid it back with regular taxes, we'd be paying it back with interest as the federal government already borrows 43 cents of every Buck it spends.

    $7.25 an hour x 40 hours per week x 2% Pay Roll Tax Savings = $5.80 per week
    $50 an hour x 40 hours per week x 2% Pay Roll Tax Savings = $40.00 per week

    Seems like the poor would benefit more from securing Social Security and not extending the payroll tax cut.

    December 21, 2011 at 5:43 pm | Report abuse |
    • Ted Dobracki

      Your math is impeccable. A family would need to be making $2,000 per week (or $100,000 per year) to garner $40 per week benefit from this SSA contribution holiday.

      More important, it is insane that for the last two years that Obama and Congress have insisted on weakening the SS system by reducing its funding and now they want to do it again!

      December 21, 2011 at 5:53 pm | Report abuse |
    • skarphace

      Ted: it depends on the duration of the paychecks. If we are talking about weekly paychecks, then yes, you would need to be making around $99,000 to get $40 back per paycheck with a 2.1% cut. However, if we are talking about a mothly payckeck, that number reduces to a bit less than $22,850.

      December 21, 2011 at 5:56 pm | Report abuse |
    • Ted Dobracki

      If 160 million American workers won't pay for their own Social Security, who will? Kids? The retired? The disabled?

      Eliminating this social security contribution holiday will not cost the unemployed (who actually might need some help) a cent. But those who are lucky enough to have a job should continue to pay. Who else will?

      December 21, 2011 at 5:57 pm | Report abuse |
  2. Ashlee

    And no.I am not on welfare or food stamps. So don't bother with that smart *SS remark.

    December 21, 2011 at 5:44 pm | Report abuse |
  3. Jan Payne

    Regarding the poster (Gary) who suggested living within our means – you bet. Thus the choice becomes whether to give to charity or not. I have already commited to United Way for 2012, so the 2% pay cut will reduce our family's necessities' budget. Unlike Congress, I'm not going to play politics with people even less fortunate than myself.

    December 21, 2011 at 5:45 pm | Report abuse |
    • Tracy

      :)THANK YOU from the bottom of my Heart for doing so!Without them,this would have been the last week My Family&I would have had a roof over our head(We have HUGE Medical needs that not even the best Insurance would be able to address)As it is,at least I&my Family will be able to have some semblance of a Christmas(no presents,just a dinner with the Lights&Heat on for once)until January 7th.I'm so glad to see that there are still a few in this World that get the "you get what you give" idea.You will be blessed more than you know!My kids thank you&people such as yourselves!

      December 21, 2011 at 11:08 pm | Report abuse |
  4. repntenn

    The problem is that $40 is nothing to the Republicans in congress who aren't living from paycheck to paycheck and whose biggest goal seems to be to make sure that things in America don't get better over the next year so that they can defeat President Obama in November of 2012.

    December 21, 2011 at 5:46 pm | Report abuse |
    • MichiganMoon

      Are you talking about the Republicans that passed a bill which extended the very same Pay Roll Tax Cut for 12 months, unlike the Democrat's 2 months?

      December 21, 2011 at 6:13 pm | Report abuse |
  5. Membery

    You like to cherry pick examples of bad money managers who live beyond their means, but that doesn't represent the majority. A lot of people are already living at the bare minimum; No cable, no internet, no eating out, one car or even none. For those people it really hurts. Even for those that can drop a service or two to survive – that is exactly what our economy doesn't need right now. Maybe you've never been poor, or maybe you just forgot what it was like. Quit blaming the poor for being poor, that is a myth. People generally don't want to be poor.

    December 21, 2011 at 5:47 pm | Report abuse |
    • skarphace

      Membery: for those whom you mention, this Payroll 'tax' cut would help very little now and hurt very little in the future. These people are the ones who would benefit more from saving Social Security, not defunding it.

      December 21, 2011 at 5:49 pm | Report abuse |
    • KasChap28

      Thank You! Finally someone who makes sense!

      December 21, 2011 at 6:00 pm | Report abuse |
  6. skarphace

    The only valid argument I have heard for extending this Payroll 'tax' cut is that Social Security will probably not be around when we retire regardless, so we may as well take our money now. If you don't believe this will happen then you definitely should not be supporting this policy of defuding OASDI.

    December 21, 2011 at 5:48 pm | Report abuse |
  7. Kaathoga

    If that $40 guaranteed me a functional government, prosecution of fraudulent banking, and justice for the ripped off in America, I guess I'd be fine with it. But it won't, $40 is about the cost of my sons respiratory medication. Top Ramen it is.

    December 21, 2011 at 5:48 pm | Report abuse |
    • johngravely

      Well put, this $40.00 will be gone and they will need more next year or sooner

      December 21, 2011 at 5:54 pm | Report abuse |
  8. Army54

    What we're seeing now is what got us into our overall finacial mess to begin with – "I want it now! The hell with tomorrow." So who's greedy now? The SS withholding doesn't go to general tax crap – it goes to pay the SS benefits that everyone is crying aren't going to be around for them when they need them. But now, when you have a chance to do your part to save SS, you cry about not having $40 NOW. We can't have it both ways....

    December 21, 2011 at 5:48 pm | Report abuse |
  9. Thomas

    Don't forget about people like me who have to pay child support. I am already being wrung dry,that 40 dollars means a lot to me.

    December 21, 2011 at 5:49 pm | Report abuse |
    • skarphace

      People like you who 'pay child support' should be taking care of your children like responsible adults.

      December 21, 2011 at 5:50 pm | Report abuse |
  10. jason

    I think someone needs to teach our govt the value of a dollar.....and if im paying 40 dollars why arent people making more payimg more then 40

    December 21, 2011 at 5:50 pm | Report abuse |
  11. johngravely

    to Kt84, must be a single person who can't find anyone that will put up with them, In my case I wanted 3 and when we got pregnant the 3 rd time we ended up with twins, and they are 2 of the 4 best things that ever happened to me.

    December 21, 2011 at 5:50 pm | Report abuse |
  12. Richard

    All the more reason not to try 'temporary' things in the first place. Once you start, there's no going back. Whether it's a tax cut, gov't subsidy, or other program, it seems to immediately become the base for comparison. Wait until the Bush-era cuts are up for ending. I'll give you a hint, they weren't just for high incomes. Not by any means...

    December 21, 2011 at 5:51 pm | Report abuse |
  13. WhatThe

    It's only $40! Oh wait, my health insurance, dental, and vision are now $679 a month, car insurance $100, life insurance $65, home owners insurance $60, gas for automobiles $200, groceries $750, and on an on it goes. Hell, we don't need the money. Let them take it and everything else we have, and be sure to vote them all back in next year.

    December 21, 2011 at 5:51 pm | Report abuse |
  14. Dave C

    I'm confused. Both the House and the Senate proposed plans to cut taxes by $40 every two weeks. The Senate's version stops in March; the House's version goes all through 2012. Exactly which one are the middle-class families supposed to support, again?

    December 21, 2011 at 5:51 pm | Report abuse |
  15. Lu

    This is an example of the Republican party holding the American people hostage in an effort to get something they want. If Republicans cared about the American people, they wouldn't put us into an all or nothing situation. They would extend the cuts for two months and come back to the table after the holiday break. It seems they are prepared to let the tax cut expire unless their demands are met. It's Bullying. $40 matters to a lot of people. Two extra months is one sixth of the year. If two extra months seems like nothing to you, then decline the tax cut all together. I would much rather have two months of an extended tax cut than no tax cut at all.

    December 21, 2011 at 5:52 pm | Report abuse |
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