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.

[tweet https://twitter.com/whitehouse/status/149237000522825729%5D

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.

[tweet https://twitter.com/SpeakerBoehner/status/149611555762343936%5D

[tweet https://twitter.com/SpeakerBoehner/status/149612691412107264%5D

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.

[tweet https://twitter.com/Krohn_DC/status/149857524248608769%5D

[tweet https://twitter.com/CAPRICECLASSIC5/status/149851340372320257%5D

[tweet https://twitter.com/AprilDlicious/status/149650391842304000%5D

[tweet https://twitter.com/SissonsTo/status/149257818250297344%5D

[tweet https://twitter.com/PtBrindley/status/149578268759175169%5D

[tweet https://twitter.com/WhySharksMatter/status/149856928653262849%5D

[tweet https://twitter.com/mattnocella/status/149240064432553984%5D

[tweet https://twitter.com/docstrangedub/status/149690011443412994%5D

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. RickJamesMemphis

    I will be the first to say that I realize times are hard for "some" people, but lets cut the crap and lay it ALL out in the open. Today most people are living WAY above their means. And when I say way above their means,, I am not talking about the obvious cell phones and cable TV, I'm talking about video games, DVDs, CDs, Ipods, dining out, having kids, etc. When I see people that are "having a hard time" they never seem to be "without" anything.

    December 21, 2011 at 3:34 pm | Report abuse |
    • Esoll

      I would agree with you. We do not have real poverty here in the US. Start traveling to some real poor countries and you will start to see how rich you are.

      December 21, 2011 at 3:44 pm | Report abuse |
    • David

      Agreed. 36 year old, family of 8? way to lean on the taxpayer. I'd love a child but until I can afford one, I'm not even thinking about it.

      "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."

      December 21, 2011 at 3:48 pm | Report abuse |
  2. Angry Mitch

    I have to echo what's been said: If $40 is that much to you, cancel your TV, your Internet, and your cell phone. We lived just FINE 10 years ago without cell phones, and we'll live just fine without them in the future if you can't afford it. The heart of the matter is that people across the country refuse to take financial responsibility for themselves and they're looking for a handout anywhere they can get it. Whether or not I'm a millionaire or far from it, if I earned my $1,000,000, why should I have to give my money to people looking for a handout? Whether or not you earn 10,000 a year or 100,000 – you still EARNED your money.

    December 21, 2011 at 3:35 pm | Report abuse |
    • John Trice

      So.... if I "earned" my money (like the wealthy "earn" their money)...... shouldn't I be able to keep my $40?? The Republican party says "no, you cannot keep your $40.... you must pay it to the government".

      But last year, I was able to keep it. (This is why I will be voting for the Democrats this year.)

      December 21, 2011 at 3:54 pm | Report abuse |
  3. Lisa

    Do you think these politicians really care about what we need? Do you actually believe they'll be looking at these comments? They could care less about the American people, and the faster you people get that through yours heads the better.

    December 21, 2011 at 3:36 pm | Report abuse |
  4. gdg

    40/paycheck = 80/month = phone/web bill = no longer able to be self-employed and work from home

    December 21, 2011 at 3:37 pm | Report abuse |
  5. Micah

    $40.00 a week is 1/8 my paycheck AFTER the government takes it's cut. This time of year I have to order 100 gallons of heating oil at a time each month to put in my tank, and that is cash on delivery (about $330.00 for 100 gallons right now). If I don't have the whole amount then I don't have heat! That $40.00 is the difference between heat and hot water or freezing!

    PS. I don't have cable, I borrow a local wifi connection from my library. Forget about health insurance, that is way out of my price range! This time of year, $40.00 can mean the difference between survival or freezing to death!

    December 21, 2011 at 3:37 pm | Report abuse |
    • Dumbbo

      I believe that you are misinterpreting the $40 figure. That is $40 every two weeks, not weekly. Since you claim $40 is 1/8 of your weekly paycheck (after taxes), your weekly wages are approximately $400 before taxes. The 2% reduction in Social Security taxes would save you $8 per week. The democrat two month plan would save you a whopping $64.

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

      It would be 2% for you. Just like it would be for anyone else (on the income below the cap). This article is misleading in that everyone will be taking a $40 hit. Few will. A lot will take less, a lot will take more, a few will nail it.

      December 21, 2011 at 5:36 pm | Report abuse |
  6. Tom the Genius

    Normally, each employee pays 6.2% of their first $106,800 in salary into Social Security. Currently, each employee pays 4.2% of their first 106,800 in wages towards Social Security (a break of 2%). 2% of 48K a year is $40 a paycheck or 2% of 24K a year for $40 a month in extra savings. Everyone realizes that you have been paying 6.2% for years and only recently received a 2% break right? How did you buy food and diapers when you were paying 6.2% towards Social Security? Live within your means.

    December 21, 2011 at 3:37 pm | Report abuse |
    • Melinarockdj

      Finally Tom a few people post who actually know what is going on. The limit went up to $110,100 for 2012. I wish the media would report what this money is instead of whipping people into a frenzy. We should't have had the cut in the first place.

      December 21, 2011 at 8:22 pm | Report abuse |
  7. phreddy

    What is worse nobody NOBODY in Washington really gives a damn. They are all millionaires several times over. Anyone who votes to reelect ANY sitting government official is crazy. Throw them all out and let's start over. This is going to cost my wife and I dearly next year $1600.

    December 21, 2011 at 3:38 pm | Report abuse |
    • Dumbbo

      Since this tax is your contribution to Social Security, can I assume that you would like to defund Social Security completely. That would provide an even larger tax break for you.

      December 21, 2011 at 5:28 pm | Report abuse |
  8. Esoll

    I am sorry! but if a $40 less per paycheck will brake you then you have other serious problems. We should start to make some sacrifies and rely less on our gov and more on ourselves. Everyone wants everthing but no one want to pay for it.

    December 21, 2011 at 3:38 pm | Report abuse |
    • Kris

      I'm not sure if you've been living under a rock, but plenty of people in this country ARE having serious problems and have been for quite some time. The difference now is that everyone else is finally aware of it.

      December 21, 2011 at 4:13 pm | Report abuse |
  9. Bob N Kansas

    It's not $40, or $1000, it's 2%. For a person making $8/hr., it's about $6.40 per week. To keep $40 per 2-week paycheck, you have to be making $50,000 per year. It's real money, for sure, and I'll keep it if I get it, but I'd much rather a) continue putting my payroll taxes into social security and medicare, where it belongs and is needed, or b) see that 2% go to the folks who really need it. What social service or education programs could be maintained with that money? What kind of jobs could be stimulated, or highways and bridges repaired? At the very least, means test it so that only the truly low-income receive the benefit. If those of us making $50,000 really need that extra $20 per week, we are not making good choices with our money. Maybe cut back on our cable TV package, or cut the 13 year old back to basic phone and text service, or prepare one more meal a week at home instead of ordering out. Fox, MSNBC, and to a somewhat lesser extent CNN are hyping this issue as the 'crisis of the week' to keep ratings up. I guarantee if a solution isn't found this week to this manufactured political 'issue', the Congress will figure out the first week in January that this can be done retroactively.

    December 21, 2011 at 3:39 pm | Report abuse |
    • kld05

      Amen !

      December 21, 2011 at 3:51 pm | Report abuse |
  10. Annia

    That would be my car insurance for the month, you know, just liability.

    December 21, 2011 at 3:39 pm | Report abuse |
  11. Lachloro

    Where are the real Americans? We have been providing for the poor in third world countries for years. What did you think what going to happen? Eventually all that money we throw down on goods from other countries, was bound to kill our economy. Unless we purchase American made, American goods, we are going to kill this society for the future Americans.

    December 21, 2011 at 3:40 pm | Report abuse |
  12. Jim

    To those Republican apologists, this short term bill was to keep things in place until a farther reaching bill could be brought to law. THAT TAKES TIME! Hence the two month extension.

    More NO NO NO from the Republicans. They will kick your grandmother to the curb if there was anyway to make Obama look bad. I didn't vote for Obama, but I can tell which party has the higher quotient of BS, and it's the Republican/Tea Bagger bunch.

    December 21, 2011 at 3:40 pm | Report abuse |
    • bill

      Jim. Just a reminder. This budget was supposed to be put in place in 2008 when the democrats held the house, senate and the presidency and they refuse to do it. Now that the republicans have the majority in one of the houses, they are trying to make things long term. They've been trying to get it through the thick skulls of the democrats for months. How many extensions have we had already? This is the third that I remember. I lost count. At some point (now) it's time to screw the short term fixes and make a long term solution. I think the republicans are right to not drag this out any longer. Make it long term.

      December 21, 2011 at 3:44 pm | Report abuse |
  13. Marcos A

    cutting back on the cell phone was the easiest way I've saved extra money. I have the smallest amount of mins and good size text plan cause who really talks on the phone anymore and NO DATA PLAN!!!!!!!!!!!!!! I don't need to check facebook every 5 mins or tweet that I'm walking around the local mall looking for new shoes. The average family with 3 cell phones pays upwards of $225!!!! WHY???? I see kids with old worn out clothes but the parents are walking around with their Iphones. America really needs to get it's act together.

    December 21, 2011 at 3:41 pm | Report abuse |
  14. Eddie

    Republicans are happy to take $1k out of the pockets of average Americans while refusing to do the same to the 1%. Republican (Ayn Rand/Milton Friedman) economics work AGAINST Americans – stop voting for Conservative fraud.

    December 21, 2011 at 3:41 pm | Report abuse |
    • bill

      Eddie. This is not a tax increase on just the lower income families. This is an expiration of a temporary tax relief on EVERYONE. The "rich" are actually losing more. 2% of 110,100 is much more than 2% on 30-50K. They are losing up to about 2500 a year. You are only losing about 1k per year...if that.They are losing more than twice as much as you are in this. They aren't protected from the expiration of this temporary tax relief.

      December 21, 2011 at 3:46 pm | Report abuse |
    • Jim

      I'd rather be the one losing $2,500, just saying.

      December 21, 2011 at 3:50 pm | Report abuse |
  15. tellmewhy

    This is my money and I want it in my pocket...not in the pocket's of the elitists in Washington. It could be 50 cents....it still belongs to me!

    December 21, 2011 at 3:42 pm | Report abuse |
    • Dumbbo

      It sounds like you would like to eliminate your contribution to Social Security and also all of your Social Security benefits after retirement.

      December 21, 2011 at 5:38 pm | Report abuse |
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65