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. skarphace

    Wake up, people. This 'tax' cut does not help the middle class, lower class, or poor nearly as much as it helps big business. If you make $52,000 it saves you $40 per biweekly paycheck. If you don't work, it saves you nothing.

    If you own a big business, it saves you 2.1% of your gross payroll, which is quite a bit more than $40. This at the expense of defunding Social Security even faster than previously predicted.

    Is this insignificant cut for the average worker really worth it in the long run? This American says 'not even close, bub'.

    December 21, 2011 at 6:43 pm | Report abuse | Reply
    • augustghost

      you must be one of those know it all jack a s s e s we all love on these blogs...take a pill and get over yourself

      December 21, 2011 at 6:51 pm | Report abuse |
    • skarphace

      And you must be one of those ignorant t r o l l s we see on these blogs. Go away already if you don't like my logic.

      December 21, 2011 at 6:55 pm | Report abuse |
    • david Rutledge

      IT IS WORTH IT TO ME!!!!! – I am barely making it as it is. Any less money and I will soon be buying food and and paying monthly bills with my credit card!! Big business is doing fine, middle class not doing.

      December 21, 2011 at 6:57 pm | Report abuse |
    • crazycatlady

      'bub' seriously, employers do not get the cut, just a cut on the works contribution. If you think you are right post a link .

      December 21, 2011 at 7:01 pm | Report abuse |
    • skarphace

      David: no offense, since I don't have much spending money either, but if we are to defund Social Security, which is what this is really all about, then you and I must also be putting money away for our retirement. Either way, we will pay in the end.

      December 21, 2011 at 7:01 pm | Report abuse |
    • skarphace

      Cat: "The two percent holiday that’s been in effect for the past year, and the extension Congress is fighting about right now, are both to employees’ share of the Social Security FICA tax."

      tpmdc. talkingpointsmemo. com/2011/12/sidebar-blistering-wall-street-journal-op-ed-gets-payroll-tax-cut-wrong. php

      December 21, 2011 at 7:07 pm | Report abuse |
    • skarphace

      I was just supporting your argument, Catlady. Just wanted to make that clear.

      December 21, 2011 at 7:09 pm | Report abuse |
    • crazycatlady

      What a difference a year makes. Last year this seemed like an unexpected gift. Now it has become an expectation. So having established this helps working people...I think it falls short. Giving a 2% tax break accross the board (up until 110,100) helps lower and middle range workers less than a family with a higher wage. If the intent is to stimulate the economy put it in the hands of people who will spend it on needs and maybe a few wants.

      December 21, 2011 at 7:46 pm | Report abuse |
  2. john

    40 dollars a week doesnt even cover the detaiiling of my mercedes.

    December 21, 2011 at 6:43 pm | Report abuse | Reply
    • Brian

      Depending on where you live you can find cut rate detailing and just as good as the expensive places. I know in my town Goodwill actually runs a detailing place. I take my Hummer and the wife's Mercedes down there. Even have taken my teenagers Jag and they actually did a good job. So yeah it can be done for $160. Cheers!

      December 21, 2011 at 6:50 pm | Report abuse |
    • richard.

      160 is a deal, usually pay 250 at the dealership. Nice find!

      December 21, 2011 at 6:54 pm | Report abuse |
    • Michael

      You guys are one of the most stupid riches who just want to show off your nothing and make jokes on millions of the poor people. One day when you die and you go to hell, just want to know how you feel at that time. So, don't you shut up and show your compassion!!!

      December 21, 2011 at 7:08 pm | Report abuse |
    • richard.

      We are providing people like you with jobs. now go home and practice buffing

      December 21, 2011 at 7:11 pm | Report abuse |
    • Brian

      @ mike I suppose I would go to hell in your world. But I live in the real world and that's that. I am not like yourself and blindly assume things. What I do for a living is help people save money in their healthcare expenses. Mostly the people that are my clients are Seniors and the very poor. So by doing that I should be Sainted. So before you get all righteous about things, at least understand that. For doing this I get paid fairly well and have made smart investments with the money that I have saved while living modestly.

      December 21, 2011 at 7:23 pm | Report abuse |
  3. geraldjones

    Hey, I have an idea, since obama is trying to get votes how about we don't pay any taxes, let's have the government pay us money to stay home and watch tv... its a good idea, I think Obama will seriously consider it if it gets him more votes, who cares about thefuture as long as he is in power.

    December 21, 2011 at 6:44 pm | Report abuse | Reply
  4. augustghost

    skarphace...$40 per biweekly paycheck is $ 80 per month....hope you are not a financial advisor

    December 21, 2011 at 6:44 pm | Report abuse | Reply
    • skarphace

      augusthost: did you read my post? I said that $160 was taking into account both the employee and employer portions of the tax, both of which are cut. That means $80 times 2, which is indeed $160 that is cut out of OASDI revenue. If you don't understand my math, then you don't understand OASDI, which is paid by both employee and employer. Understand now? Probably not, but I thought I would try.

      December 21, 2011 at 6:49 pm | Report abuse |
    • skarphace

      august: you are right. The employer's portion of the tax was not cut. It would amount to $80 per worker per month.

      December 21, 2011 at 7:12 pm | Report abuse |
  5. rlowens

    The effect an extra $40 per paycheck has on the average worker in America is irrelevant. What is relevant is how our government is managing and spending the money they get. Rather than emotional appeals from both sides on the issue regarding the effect $40 per paycheck has, we need meanningful dialogue of how we take the "bottle" away from the addict (the US on its drunken spending binge). And, why is it that the Republicans who simultaneously involved us in multiple wars while arbitrarily cutting taxes for political points are just now belly-aching about how Democrats are spending money? The Republicans under Bush started out with a healthy budget surplus that they effectively gave to their friends, along with over a trillion dollars of other totally unnecessary spending on a ridiculous and pointless war that did nothing but destroy our image around the globe. I'm ready for a new set of clowns in Washington.

    December 21, 2011 at 6:45 pm | Report abuse | Reply
  6. turtle1975

    I consider myself lucky that my family's day to day needs wont be affected if I dont get this $40.00. This is the money I give to charity or donate at different places. I will not be giving that much any more so somewhere someones everyday needs will be affected.

    December 21, 2011 at 6:46 pm | Report abuse | Reply
    • skarphace

      You didn't get this $40 in 2010. How did you survive then?

      December 21, 2011 at 6:51 pm | Report abuse |
  7. JohnNJ

    $40 is small potatoes to most middle class families. A deal was worked out with the Senate Republicans but the Republican/Tea Party is attempting to once again hold the American people hostage so that they get additional cuts to social programs. Democrats, do not give in. I for one will adjust my retirement budget to fight these Tea Party thugs.

    December 21, 2011 at 6:47 pm | Report abuse | Reply
  8. Ron

    I'm always amazed that the people that complain they can barely afford groceries are invariably overweight.

    December 21, 2011 at 6:48 pm | Report abuse | Reply
    • turtle1975

      Thats because they eat the cheapest food available which is mostly fattening....

      December 21, 2011 at 6:51 pm | Report abuse |
    • Brian

      As right as you may be the crappy low cost food is usually high in calories. Just sayin...

      December 21, 2011 at 6:52 pm | Report abuse |
    • 567123

      carbs are the worlds cheapest food source

      December 21, 2011 at 6:58 pm | Report abuse |
  9. Peter

    This whole debate is silly. If the path to saving our ecomony comes down to $40 per week for the average american then we really are in trouble. Continuing to reduce the funding of social security will ultimately hurt those who will need it most long after all the current crop of politicans are retired and the average american has saved nothing for their own future.

    December 21, 2011 at 6:50 pm | Report abuse | Reply
    • skarphace

      It is once again about big business. It is big business owners that benefit the most from this cut.

      December 21, 2011 at 6:52 pm | Report abuse |
  10. charlie

    $40 per paycheck times 160 million workers equals about 6.4 billion in spending or about 100 billion annually. Throw in the multiplier effect on the economy (trickle around a wee bit) and you're looking at about a 500 billion boost. Little bits add up and everybody is better off. Cost to Social Security is nominal because employers are still matching at 6.2%. Cheers.

    December 21, 2011 at 6:51 pm | Report abuse | Reply
    • skarphace

      Charlie: you are wrong. The employer's portions are also cut to 4.2%.

      December 21, 2011 at 6:53 pm | Report abuse |
    • No

      Employers still pay 6.2%, do your homework. http://ssa.gov/pubs/10003.pdf

      December 21, 2011 at 7:09 pm | Report abuse |
    • skarphace

      No: you are correct.

      December 21, 2011 at 7:10 pm | Report abuse |
  11. richard.

    Complaining about 40 dollars is a joke. If you are not making 50K then you are not paying the 40 dollars anyways. Try working harder and getting a real job. I work over 50 hours a week in finance to make 180k a year. you want more, study and get a better job. jobs are not randomly assigned, you get what you work for.

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

      Nice of you to show how insecure you are and totally out of touch with reality. I guarantee you there are people working far, far harder than you making less than 30K per year. Try opening your eyes. The amount of money someone makes doesn't signify the amount of work they do - especially in the Corporate world. Seriously, get real.

      December 21, 2011 at 6:55 pm | Report abuse |
    • Brian

      Richard I have a six figure career and this wont really hurt me at all. However not everyone can have that. No economy is setup to even have that as a possibility. I can tell you that 50k is nothing now and if that is all a family is surviving on they are borderline if not poverty by today's standards if they have the 2.3 kids. So yeah $40 per paycheck or a thousand dollars a year is a big deal.

      December 21, 2011 at 6:56 pm | Report abuse |
    • Brian

      @Reality

      I started out fairly poor however the "Reality" is that the more I made once I hit six figures the less I worked. However I did put in 50-60 a week for a long time to get to the 100k mark but after that things got much easier and new doors opened that were not there before because once you have some cash saved up its easier to make money. Most people that I know making a lot of money work no more than 40 or much less per week. Just my observation on the world here in the US.

      December 21, 2011 at 7:02 pm | Report abuse |
    • richard.

      secure? I live in a gated community and have protection one.

      If 50k is nothing when you have kids, dont have kids. The tax was 6.2% in 2010. you should bank on the govenment lowering taxes. bunch of fools

      December 21, 2011 at 7:03 pm | Report abuse |
    • Brian

      @Richard, the problem is not people having children it is our governments economic policies that has siphoned off the jobs that the masses use to be employed in. I suggest a good long and hard look at our policies and how they destroy our economy. Doesn't seem either party is interested in doing anything about it.

      December 21, 2011 at 7:17 pm | Report abuse |
  12. Reality

    Anything more than what they already take is a significant amount and should not be allowed. How about you shut down some of the useless crap that the government does and lower the taxes instead. That would be a better thing to focus your efforts on, you who are in the Government - you are our (we the people) employees (aka subordinates) and you'll either do what is required of you by us as we ask, or you will be fired. Get it? Good.

    December 21, 2011 at 6:52 pm | Report abuse | Reply
  13. rlowens

    We will stop having wars when the people who start them have to pay for them out of their own pockets. Then, we won't have such terrible budget problems from funding a military that represents a black hole into which we throw money and never see it, again..

    December 21, 2011 at 6:55 pm | Report abuse | Reply
    • whistlendixie

      u gonna have to execute a whole lotta dayum fools in this country boy, before thats gonna happen!!!!

      December 21, 2011 at 7:01 pm | Report abuse |
  14. J Gross

    $40 bucks a pay check is a tank of gas to get to work for two weeks. In the summer I ride a bike to save the money. But here in Maine during the winter months I must us my car to get back and forth. How about Congress take a look at how the real people of this country live. Stop sending money over seas when we have our own people that need help.

    December 21, 2011 at 6:55 pm | Report abuse | Reply
  15. whistlendixie

    $40 is good for a cheap piece of AZZZZ on main street!

    December 21, 2011 at 6:59 pm | Report abuse | Reply
    • Brian

      $40 to make you holla?

      December 21, 2011 at 7:24 pm | Report abuse |
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