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. kevin

    We're in a bind. Nobody wants burden their children and grandchildren with debt but that's exactly what we're doing with this tax cut. This tax cut mostly adding dollar-for-dollar to the national debt. This tax cut hasn't and won't pay for itself because the payroll tax rate was already low. The only thing happened is Social Security brings in less than it pays out.

    Eventually we'll have to stop this tax shell game and start making some serious cuts and raise some serious tax revenues because our situation is not getting any better. The fundamentals aren't improving – home value won't return to 2005 levels any time soon if at all. The Dow won't go back to 14,000+ any time soon if at all. We're in a persistent funk because the fundamentals of our economy and capitalism are awry, and no stupid little tweak to the payroll tax will change that.

    December 21, 2011 at 4:28 pm | Report abuse |
  2. JP

    I can't lose $40/week from a paycheck I don't get. When I get a job again, $40/week would pay for my gasoline to get to and from work, or it's about a third of my cell phone bill.

    December 21, 2011 at 4:29 pm | Report abuse |
    • DumbLiberals

      You have no job, but you have a $50/mo minimum phone bill? FAIL.

      December 21, 2011 at 4:30 pm | Report abuse |
    • DumbLiberals

      CELL PHONE bill at that!

      December 21, 2011 at 4:30 pm | Report abuse |
  3. DumbLiberals

    I'd forgo my $40, if someone could legitimately explain how 2 months of payroll tax cuts is more logical than 12 months. Math is so hard.

    December 21, 2011 at 4:29 pm | Report abuse |
    • IBON4IT

      The year long plan comes with the mandatory installation of the Keystone pipeline which is widely repudiated by Democrats. The 2 month deal allows to extension of talks on that matter while keeping things the same as they are now.

      December 21, 2011 at 4:37 pm | Report abuse |
    • DumbLiberals

      Of course it is, they don't want JOBS. Math is hard. Keystone Pipeline = JOBS. More workers. You know, the thing the bailout was suppose to create? FAIL. next.

      December 21, 2011 at 4:45 pm | Report abuse |
  4. Mike

    Let them take it away along with medicaid. Weren't they supposed to be temporary fixes? If a party doesn't want to vote to renew it then they look like the bad guy to the generic American moron who elected just another out of touch politician who promises the moon and delivers little. Lower taxes, lower spending, and balance the budget. Do we really need to be up in arms about a $1000 'stimulus' check?

    December 21, 2011 at 4:30 pm | Report abuse |
  5. Butch Thompson

    Sometimes we need short term solutions for long term fixes.
    $40 is what I have to spend each week on groceries.
    If I loose that money, I loose a week of food.

    December 21, 2011 at 4:30 pm | Report abuse |
    • DumbLiberals

      Butch, it's "lose". But you'd still hold onto your Internet subscription, obviously.

      December 21, 2011 at 4:31 pm | Report abuse |
  6. Brian

    The reason people are panicking about $40/month is because no one in this country learns how to save their personal income in good economic times, they just spend spend spend. It also is because no one really understands what is necessary and what isn't. TV, Internet, eating out/giving your kids lunch money are extra benefits, not necessities. One car/adult is also a luxury. The average American family who says they have to cut groceries out of their budget first is just being disingenuous about what they really need to survive.

    December 21, 2011 at 4:30 pm | Report abuse |
  7. Roger

    Means I get $40 of my social security today guaranteed. Being in my 20s that money would have gone to others and would not fully be there for me when I retire, 2050?. So, yay, my wealth is being redistributed a little less than normal.

    December 21, 2011 at 4:31 pm | Report abuse |
  8. gurarro

    I don't look at it weekly, I look at it monthly. For a family of 4 with 2 working adults, and each getting hit with a 50.00 per paycheck reduction, that's 200.00 a month. That's just enough for gas for one of us to get to work each month. Trying to stay above water with no pay raises in 3+ years but nothing is getting cheaper, it is a tough act to balance.

    December 21, 2011 at 4:32 pm | Report abuse |
    • DumbLiberals

      Math is hard, I know. Imagine if it was 12 months – how grand your outlook on life would be – you wouldn't have to worry about bi-weekly, monthly. You could just KNOW that you would have $1000 for the entire year.

      December 21, 2011 at 4:35 pm | Report abuse |
    • Richard

      If they were getting hit with $100/month a piece, it would mean that they were already making $100K per year.

      December 21, 2011 at 4:40 pm | Report abuse |
  9. Angry in Ohio

    I'm angry that the best our Congress could do was make a tentative agreement spaning two whole months. I'm angry that they all went home for vacation without getting any deal done. I'm angry that these idiots keep getting elected. They should all be thrown out of office; there aren't any good ones. Fortunately I have lived below my means for my entire life and $40 makes little difference to me, but I feel very sorry for those who really need it.

    December 21, 2011 at 4:33 pm | Report abuse |
  10. IBON4IT

    In most 2 income families it's not $80/ month, it's $160/month which becomes significant. That's my insurance bill for cars/house/life. Republicans SAY they are for smaller government and lower taxes but then they hold our dollars hostage for their pet projects. Disgusting.

    December 21, 2011 at 4:33 pm | Report abuse |
    • Richard

      If it's $40/paycheck for two incomes, that would mean that they're making about $100K per year already.

      December 21, 2011 at 4:41 pm | Report abuse |
  11. CC

    It was your choice to have kids – stop using them as excuses why you can't afford the basics.

    December 21, 2011 at 4:33 pm | Report abuse |
  12. JaredS

    All you people that say that we should adjust our way of living or cut out things we like to make up for the $40 extra the government will take out is what's wrong with America! We need to stand up and fight and take America back and stop sitting back and letting the crooked government take more and more and more. Let them take this $40 and a few years down the road, they'll take another $40. I'm sick and tired of it. Yeah, some of you rich people won't be affected and don't really care, but to some people, $40 means everything!

    December 21, 2011 at 4:33 pm | Report abuse |
  13. Melinarockdj

    $40 doesn't mean a lot to me, but I understand it means a lot to others. What really bothers me is that both parties and the media are treating this like they are raising your taxes. This is NOT a tax increase, you have been getting a 2% break in an environment where the Gov't is concerned about how they are going to pay for Social Security. THIS is how we pay for Social Security and the rate has been 6.2% since 1990 and hasn't been increased since. If you are going to report on this at least educate the public instead of getting them all worked up to think something is being taken away from them when it isn't. Please put the 4.2% in context for the public because everyone so far has done a very bad job of it.

    December 21, 2011 at 4:34 pm | Report abuse |
  14. John

    I agree with President Obama about the TAX CUT, but two months is too short. I know what he is trying to do and in the end our representatives will extend it for the year, thats politics in it purest form.

    December 21, 2011 at 4:35 pm | Report abuse |
  15. Give Me a Break

    For me, the tax break ending won't kill me, but it's still $1000 less per year and I'm far from rich. Despite my top tier performance at work, I'm still just a flunky with no chance at a promotion or raise. Excuse me if I don't want to give up the tax cut and excuse me if I think that those who control most of the wealth should pay most of the taxes. And that will remain true as I continue to try and scramble up the wealth ladder. I need what little break I can get so I have money to start investing, whether in a home or retirement or otherwise. I live as frugally as I can so I can squeeze out a little savings here and there in the hopes I won't be working until my grave is ready. And when I finally have more I will be fine with giving more.

    December 21, 2011 at 4:37 pm | Report abuse |
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