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. CACTUSJUICE

    people have gotten lazy, greedy and what not, give me give me give me, me, me, me, get a real freaking job or just get a job, tired of paying for you.

    December 22, 2011 at 11:54 am | Report abuse |
  2. Larry

    40 bucks means a bag of popcorn / a cpl cans of coke / 2 bags of peanuts – if your attending any of those pro football games, or ANY Professional Sport, take a good look at those PACKED stadiums ! even pro basketball – any any other sport ! More people have more money than the news media thinks. People don't pay the price of a "happy meal" to get in, you know. So, 40 bucks would pay for the extras, when you're payin 400 bucks to get in those stadiums.

    December 22, 2011 at 11:55 am | Report abuse |
  3. Erik

    $40 is a martini and a snack at a nice place after work Friday.

    December 22, 2011 at 11:56 am | Report abuse |
  4. Guerrina

    I manage groceries once a month now and then can only spend $40-$50. This would leave me no money for groceries at all.

    December 22, 2011 at 11:57 am | Report abuse |
    • Dennis

      I only make $40 a week, so this will take away all of my money.

      December 22, 2011 at 11:59 am | Report abuse |
    • skarphace

      Then how in the world did you survive back in 2010 when this cut hadn't happened yet? This was supposed to be a temporary cut since it cuts funding to Social Security. So if you get your cash now you won't get Social Security when you retire. You can't have it both ways.

      December 22, 2011 at 12:00 pm | Report abuse |
    • skarphace

      LOL Dennis.

      December 22, 2011 at 12:01 pm | Report abuse |
  5. Voice of Reason

    $40 is not worth the future insolvency of Social Security. Repeal the 2% reduction altogether, or reduce Social Security payments to compensate for the reduced tax.

    December 22, 2011 at 11:59 am | Report abuse |
    • skarphace

      Exactly. My theory is that this is a systematic effort to phase out Social Security. They will just keep cutting the OASDI rate until we aren't paying into it at all. Then, when they abolish it, we have nothing to complain about since we aren't paying into it anyways.

      I predict this to happen in 10 years. If you are under 55, you will get no Social Security benefits. I also expect HI (Medicare) to start to be cut next.

      December 22, 2011 at 12:04 pm | Report abuse |
  6. Moneymatters

    Congress needs to experience how the 99% live. So, I strongly suggest an experiment. For the next 6 months, they live off $7.25/hr. for a 40 hour work week. In doing so, they can't draw off their congressional salary, any other forms of income, and any money stored for them in other accounts. Their annual monthly income, pretax, is $1160.00.Now, here's the bills they face. To be fair, they can stay in their houses and not move into someplace that might be more affordable. Now, here are the monthly bills. Electric bill is 90; water/sewer is $65; gas (if applicable) is $35. For phone service, $100. Internet is $20. Groceries are $400, which covers the entire month. Auto insurance is $150. Health insurance and doctor's visits are $200. Additional personal income is $400 per month (gas, unexpected costs like paying for car repair, etc.). OK, the grand total is $1460. Remember the monthly income, pretax, is $1160. Rent/mortgage cost isn't being covered because I'm feeling generous. Clearly, on a minimum wage salary, they'd be running at a deficit of $300 exlcuding the cost of mortgage/rent payments. Wake up, Democrats and Republicans. Oh yeah, why should the 1% care? They don't care if we can't afford to pay bills.

    December 22, 2011 at 12:01 pm | Report abuse |
    • Voice of Reason

      99% of Americans do not make $7.25 an hour. Try again.

      December 22, 2011 at 12:04 pm | Report abuse |
    • skarphace

      This cut only gives you $40 extra per biweekly paycheck if you are getting around $50k a year.

      December 22, 2011 at 12:08 pm | Report abuse |
    • Alison

      Yes, but a decent percentage of Americans DO make $7.25/hr and have to be able to live on that. It's virtually impossible with how expensive even basic needs are.

      December 22, 2011 at 12:11 pm | Report abuse |
    • skarphace

      If you only make $7.25 an hour, and work 40 hours a week, this cut does not save you $40 per biweekly paycheck.

      The math: 80 hours * $7.25 per hour * 2.1% = $12.18. This is your savings per paycheck, not $40.

      December 22, 2011 at 12:15 pm | Report abuse |
    • Voice of Reason

      Not enough to risk the future of Social Security as a program.

      December 22, 2011 at 12:16 pm | Report abuse |
  7. Alison

    If everyone just started extreme couponing, nobody would have an issue.

    December 22, 2011 at 12:03 pm | Report abuse |
    • skarphace

      The grocery outlets would. If everyone did extreme couponing, they would lose money and start to give less coupons. It would be a wash.

      December 22, 2011 at 12:05 pm | Report abuse |
    • Alison

      I was being sarcastic.

      December 22, 2011 at 12:07 pm | Report abuse |
    • skarphace

      I didn't catch that since extreme couponing would indeed save you money.

      December 22, 2011 at 12:10 pm | Report abuse |
    • Alison

      It definitely would. Sadly, I don't have the patience to do it.

      December 22, 2011 at 12:12 pm | Report abuse |
    • Voice of Reason

      If basic needs are so expensive, maybe you should develop the patience for couponing. Just saying.

      December 22, 2011 at 12:20 pm | Report abuse |
    • Alison

      In this thread, when did I say that basic needs are expensive? It was a joke. Lighten up.

      December 22, 2011 at 12:29 pm | Report abuse |
    • Voice of Reason

      Right above you did. Couponing is great. We do it and can save 50% on grocery cost by just spending about an hour or 2 a week on it. Well worth it.

      Alison

      Yes, but a decent percentage of Americans DO make $7.25/hr and have to be able to live on that. It's virtually impossible with how expensive even basic needs are.

      December 22, 2011 at 12:33 pm | Report abuse |
  8. Nigel

    I am going to ask my boss to begin paying me once a month instead of every week. That way, if I only get one paycheck per month I will only have to pay $40 extra instead of $160.

    December 22, 2011 at 12:04 pm | Report abuse |
    • skarphace

      LOL

      December 22, 2011 at 12:05 pm | Report abuse |
    • Nigel

      Think of what I will be able to do with that extra $120 a month! What could you do with an extra $120/month?

      December 22, 2011 at 12:07 pm | Report abuse |
    • skarphace

      I really do hope you are joking.

      December 22, 2011 at 12:11 pm | Report abuse |
  9. John

    Its $40 each paycheck if you get a paycheck twice a month so its really $80 a month less than you are getting now if you make $50k a year more if you make more. This is for 160 million americans so 160 million times $80 a month less being spent each month just guess what that is going to do to the economy!

    December 22, 2011 at 12:04 pm | Report abuse |
    • skarphace

      The flip side of that argument: this is for 160 million Americans, so 160 million times $80 a month less being put into Social Security revenues which will make Social Security go insolvent much sooner than previously predicted.

      December 22, 2011 at 12:07 pm | Report abuse |
    • Walter Rand

      Also, to pay for this, there are tax increases on new home purchases. So take 160million * 80, and take that money away from what American's can spend on housing every month. Imagine what that will do to the economy.

      December 22, 2011 at 12:08 pm | Report abuse |
    • skarphace

      Correct, Walter. Either funds get cut or that money comes from somewhere else, and therefore is a wash.

      December 22, 2011 at 12:13 pm | Report abuse |
  10. tsung

    regardless how much 40 bucks meant to you. Politician have no right to play our money like that. The beef here is not the amount the money they are toying with... it is how they toying with.

    December 22, 2011 at 12:08 pm | Report abuse |
    • skarphace

      You do realize that either Social Security revenue is being cut or that money comes out of our tax dollars from somewhere else, right? You can't just cut and not defund something else.

      December 22, 2011 at 12:12 pm | Report abuse |
  11. upstateny

    $40.00 may seem a little or alot depending on your personal situation But, it seems to mean a helluva alot more to those imbosols in Washington. Just remember senators, congressmen...people's memories aren't as short as they used to be especially when you see the American people getting frustrated over unresolved policies/promises. Has anyone really done anything with illegal immigration, skyrocketing health care costs, getting manufacturing and customers jobs back here in the USA, the abuse of the welfare and Social Security Disablity programs...and now you guys are fighting over $40.00 a week to the working class. Screw all of you

    December 22, 2011 at 12:11 pm | Report abuse |
  12. Annette Y

    What would $40.00 mean to me. I get tired of seeing comments like "you are living above your means". Guess what, we the American people are not. This is s a new day and era and things like cable, cell phone and internet service are now the requirement to keep informed and in touch. I need my $40.00 for the raw fruits and veggie so that I can stay healthy. And we all know that junck food is bad for us and to eat healty foods cost more. With my health I can praticipate in woriking and contribute my fare share. So stop whinning congress get off your butts and get this done! WE ARE FED UP!

    December 22, 2011 at 12:12 pm | Report abuse |
    • RoboKnuckle

      " I get tired of seeing comments like "you are living above your means". Guess what, we the American people are not."
      ++++++++++++++++++++++++++++++
      Really? Americans do not live above their means? Where do you live, in an Amish commnunity?

      December 22, 2011 at 12:48 pm | Report abuse |
    • upstateny

      Annette, I agree with you. I remember when I could pay the mortgage, health care, utilities, groceries, put money in a 401K, savings AND still a few dollars left over at the end of the month. Now...with the rising costs of EVERYTHING, no increases in the paycheck, no additional employer contributions to health care, groceries, utilities, I've littery had to stop putting money in my 401K and I'm fortunate most months to still be able to contribute my savings for emergencies, car repairs, etc. Many people who lost their jobs are starting off with lower pay and less benefits, I consider myself very fortunate however for people to assume that people are not living within their means are well...you know. I'm sure it's true of some but not all. People really need to understand people's situations before making hurtful and false accusations. Merry Christmas Annette hope things improve for you and everyone in 2012.

      December 22, 2011 at 1:09 pm | Report abuse |
  13. AKILEZ

    40 Bucks a week can buy me groceries as long the prices of the food i pruchased is not over 5 bucks.

    December 22, 2011 at 12:12 pm | Report abuse |
  14. cef

    $40 per paycheck. That is what I usually have left over after paying my bills. $40 that I have to stretch over 2 weeks. I have not been able to make ends meet despite working a full time job. Daily costs have gone up and has severely affected my simple lifestyle dictated by necessity. Congress needs to wake up, or figure not having a job come election time.

    December 22, 2011 at 12:13 pm | Report abuse |
    • skarphace

      Then by your argument, we should abolish Social Security alltogether since it would mean an extra $120 per biweekly paycheck instead of just $40. Get your cash now and not have it when you retire. Still sound like a good idea?

      December 22, 2011 at 12:19 pm | Report abuse |
  15. Jeff

    It's very simple. A middle class wage earner of approx. $50,000 would lose about 80 per month take home pay.
    If a person who makes $300,000 a year got the same 2% cut in take home pay, it would be about $500.00 less take home pay per month. I would think that even someone who grosses $300,000 per year would miss $500.00 per month less in their take home pay. The more you make, the more you spend. It's just harder for low and middle income earner because a larger percentage of their pay goes for daily neccesaties, including try to save money for retirement in their 401k plans, pay for their children's college, etc. The reason we are in the economic straights that we are now is because for years it that one party was always for less government interference in our lives, less protection for the common person, etc. This proved to be problematic because the "Rich" on wall street and home investments banking were incorrectly be untruthful in their dealings, just to keep making more money. I still can't believe that one of these parties is still preaching to have less government interference in our lives (learn from our past mistakes before it's too late). Giving more pocket money to the top 1 to 10% of the wage earners in the country will not help the economy because everyone is trying to make more money no matter what they currently make. Give rich company owners more money and tax breaks so that they can move American jobs over seas so that they can make more money. I'm sorry but it doesn't make sense to me. Instead of getting mad at each other, let's work together to help ALL Americans with the same energy.

    December 22, 2011 at 12:14 pm | Report abuse |
    • skarphace

      Your math disregards the OASDI cap, which is currently $106,800 (although it will be raised in 2012).

      December 22, 2011 at 12:16 pm | Report abuse |
    • skarphace

      In other words, nobody would save more than $186.90 per month ($106,800 * 2.1% / 12) no matter how much they made.

      December 22, 2011 at 12:18 pm | Report abuse |
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