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. Realistic

    All you folks complaining about $40 are silly. Plain and simple.

    My monthly bills are as follows. Rent and insurance. (car/health/dental)

    Paid cash for my car $1000 bucks, so no car payment. (those of you who think you need a new car are silly) Ya, sure I sit in my POS car at stoplights and get snooty looks from the BMW beside me sometimes. I just laugh while I drive away thinking of how up to their noses in debt they are.

    Cell phone is a luxury.
    Cable is a luxury.
    internet is a luxury.
    the list goes on and on.

    I have so few bills because I made the choice to have few bills. Those of you that complain about debt are the ones really get me steaming. Do Not Buy Things You Cannot Afford. Simple! If you need a loan for it, you can't afford it.

    Now, after a number of years living bare minimum I am in a position to finally make a very large down payment on a home(read 50% down) But still I live in an apartment debt free. Why??? Because I am afraid to become you!!! I do not want to ever worry if $40 will break my budget. Guess I will keep renting, and suffering the insufferable life that is living without the most trendy high-tech phone and drinking starbucs coffee, until I can afford to pay cash for that house.

    Maybe everyone can't be as frugal as me, but you can certainly do something to better your situation.

    Caveat: Student loans have become a necessary evil. (blame your parents for having you before they were financially stable enough to properly raise you)

    for the nay Sayers... No, my parents did not pay for my college.

    December 21, 2011 at 5:14 pm | Report abuse |
    • U_R_A_LIP

      you sound really lame and no fun, I am happy I dont know U. Bet U don't get laid very often

      December 21, 2011 at 5:16 pm | Report abuse |
    • IgM

      You do realize that renting is a waste of money, right?

      December 21, 2011 at 5:18 pm | Report abuse |
    • Chifte

      To Realistic,

      Your POS $1,000 car more than likely will not last long, will have major repair bills. People with new cars typically enjoy the idea of not having to worry about one of the most important things in a working adults life breaking down and causing suffering. I've never met a single person who buys a $1,000 car these days and isn't having major issues. I'm not a car guy, I just want something highly efficient and economical so even if I had a $150,000+yr in come I would still drive some sub $20,000 eco box.

      STATISTICALLY, people who are NOT in debt still spend nearly 100% of their income, being out of debt does not mean you are better off. So get off your high horse, very few people can claim to be debt free, do not spend most of their income and enjoy their life. People can easily be $50,000, $100,000, $250,000 in debt and be better off than you are with no debt.

      Obviously there are some differences between debt and no debt, as there's no urgency to pay things on time thus no penalties but it's really not an issue if you have the income to cover it.

      There's a stick so far up your butt I bet no one around you can stand you more than 10 minutes.

      December 21, 2011 at 5:24 pm | Report abuse |
    • nrog

      Do you seriously think those who are saying $40 every two weeks would be a big help are the ones sitting in a BMW next to you? I really don't think so. Also, your comment about student loans implying that the need for loans points to a failure of parents, is equally off base. College is a near necessity in today's world, but it is not affordable for most people without at least student loans (if not other forms of financial aid as well). I would estimate that 75% of the population does not earn enough, even with frugal spending, to save up to pay for even a modest college. You have to be realistic, and your extreme example is not very realistic.

      December 21, 2011 at 5:24 pm | Report abuse |
    • Karen

      You depress me!

      December 21, 2011 at 5:25 pm | Report abuse |
    • Realistic

      I never said I do not have expendature for fun... I scuba dive often, hike, travel , party etc. Thanks.


      You do realize that renting is a waste of money, right?

      In the extreme long run you are correct. Any decent home loan calculator will take into account your current rent, vs mortage payment plus interest and tell you how many years of renting=breakeven point. Try researching it a tad. If I purchased a average home in my state ($500,000) using a loan at the end of my 30 year loan I will have PAID nearly $1,000,000 for that home. I have done the math and will have only paid around $150,000 in rent by the time I purchase the home in full. Total cost $650,000. That seems like a pretty large chunk of savings compared to the loan route.

      December 21, 2011 at 5:27 pm | Report abuse |
    • Anthony M.

      You’re a self absorbed idiot. Apparently brains are a luxury you’re currently doing without as well.

      December 21, 2011 at 5:27 pm | Report abuse |
    • Krista

      People who work hard for their money should be able to afford the occasional "luxury". The rich whine about taxes going up perhaps 1% on them, and the Republicans fight it tooth and nail, but they'll let it go up quite a bit more on people who actually need the money.

      December 21, 2011 at 5:32 pm | Report abuse |
    • haymo

      And look how incredibly angry at the world you are.

      December 21, 2011 at 5:38 pm | Report abuse |
    • Dear Mr Realistically false

      Thank you for your reply. While I do agree with some of your comments, the luxury part of your life is a necessity for others. Do you read a lot? Watch any Television? Or do you sit at home and count your quarters, nickels, and dimes for your "wonderful-I-deserve-a-pat-on-my-own-back-for-saving-money" house? Many of us are born into something that we have no control over, so why should I blame my parents for doing well themselves and myself being a part of a recession that the USA/World hasn't experienced in several generations?

      What you are simply doing is putting yourself up on a pedestal rather than discussing the topic at hand.

      What is $40 to me? For me it is lunch for about 16 days. Ever go through that? Ever have only $0.98 in your pocket, work your hardest to pull yourself out of that, and then get hit with a situation where NO one is hiring AND there is a hiring freeze resulting in you having to work in a poorly paying job because you can't make ends meet and no one else is taking new people on?

      Sounds like your life is "perfect". So why comment here?

      December 21, 2011 at 5:40 pm | Report abuse |
    • johngravely

      I get a kick out of the people complaining about the complainers, you are defending a government that can't budget themselves, we wouldn't have to be fighting over $40 if we were not in this position in the first place. and for those of you that thin k I don't live within my means I have 4 kids an old houe and 0 new cars, I work 1 full time job and 2 part time jobs , my wife works 1 full time job. The people that think this is ridiculous must be the ones that had mommy and daddy take care of them, so why would they need the money any way. the ones that want to give up there $40.00 have them sign up for it, the ones that don't let them keep it. You guys that sign up can pay for there $15.00 cups of coffee these guys have while they argue about our future.

      December 21, 2011 at 5:41 pm | Report abuse |
    • nrog

      I don't agree that "renting is a waste of money". That is way too simplistic. If you bought a house two or three years ago and saw its value drop 40%, then would have been far better off being a renter. A renter does not build equity, but a renter also doesn't lose equity in a downturn and does not pay broker fees, property taxes, and maintenance / renovation costs. Home ownership is a fine thing, but it isn't necessarily better than renting, and can be a lot worse.

      December 21, 2011 at 5:57 pm | Report abuse |
    • Realistic

      Dear Mr Realistically false
      I am most certainly discussing the topic at hand. The only reason people can complain about $40 is due to lack of future planning. I do realize these are hard times. I do not mean to put myself on a pedistal. Just trying to make a point how a person with hard work and smart spending can do well without earning 6 figures.

      My posts although can be viewed as heartless the intent is to educate people on spending.

      December 21, 2011 at 6:05 pm | Report abuse |
  2. Harry Italia

    Hey, $40 means full tank of gas to go work, I work all 7 days. I run little c-store/gas station if my customer have $40. They will spend some of their money at my store and may be I make another $40 of it. So for me it is $80.......Thanks

    December 21, 2011 at 5:14 pm | Report abuse |
  3. DNadeau

    Do you know how many people have been gunned down over $40...

    December 21, 2011 at 5:14 pm | Report abuse |
  4. Jayden

    We all have heard the financial advice on having at least 3 month emergency fund, so even if not having $40 doesn't break you, you can always put it toward your emergency fund. $40 per paycheck, or $80 – $120 per month, or roughly $1040 per year if my math is right. Not bad. I'll take it.

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

    People are upset about losing $40.00 because it covers their iphone data plan. Without it they won't be able to waste time posting on Facebook, Twitter complaining about how they have no money or job.

    December 21, 2011 at 5:15 pm | Report abuse |
  6. Seth

    Which bonehead county elected Jim Boehner to Congress? Let us get rid of the county altogether so that we do not get leaders like speaker in Congress.

    December 21, 2011 at 5:18 pm | Report abuse |
    • oneSTARman

      By 'Get rid of It' I assume you mean Thermonuclear Obliteration

      December 21, 2011 at 5:23 pm | Report abuse |
  7. hippediva

    I can feed my family of 3 plus a dog for 5 days on $40.00.

    December 21, 2011 at 5:18 pm | Report abuse |
    • Your_Mom's_Face

      Then watch them get fat

      December 21, 2011 at 5:19 pm | Report abuse |
  8. Rick

    They say the ability to pay $10 a month more on your credit card will help you pay it down. Many people would no longer be able to do that.

    December 21, 2011 at 5:19 pm | Report abuse |
    • Brandy

      We've known for decades that the longer we're in debt, the more money the major credit companies make. Wouldn't be surprising at all if some of the biggest ones were popping bottles of champagne at the sounds of this.

      December 21, 2011 at 5:27 pm | Report abuse |
    • Kt84

      Riiiiiiight. THAT'S what people do with $40.

      ... if only they did.

      December 21, 2011 at 5:34 pm | Report abuse |
  9. KBrad

    $40 out of a paycheck??? WHAT PAY CHECK?? I am still out of work after being laid-off in July. Single and over 55 and I NEED the extension of unemployment benefits to keep my house. This bill needs some REAL thought. Something Congress CAN't do before the biggest holiday of the year. PASS an extension of two months, go home and realize some of us are worried where we will live in 2012 and if we'll eat! Think about it CONGRESS while you sit in YOUR cozy homes!! Maybe a Christmas miracle will happen and CONGRESS will care when they return.

    December 21, 2011 at 5:20 pm | Report abuse |
    • nrog

      I'm confused. If you were laid off in July, you still have unemployment available, as it now goes for almost two years. I've been in your shoes, but if you can't find work at your previous salary, you surely can find something. This may mean you have to lose your house. Or possibly do what I did: downsize to a smaller home (or apartment) and sell or rent out your house. The rental market is strong so you likely can find someone to rent it to cover most or all of your mortgage.

      December 21, 2011 at 5:52 pm | Report abuse |
  10. That Guy over there

    All these people complaining about $40, but statistics show people arnt even saving, or even doing anything usefull with their money. Americans are blowing it anyway. When we get our paychecks we pay everyone else first instead of ourselves. The average american under 35 has $0 in their savings account. What are you complaining for.

    December 21, 2011 at 5:20 pm | Report abuse |
    • Jmehed

      That is because if we dont pay everyone else first then our bills wont get paid. Its called living paycheck to paycheck.

      December 21, 2011 at 5:26 pm | Report abuse |
  11. oneSTARman

    An eighth

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

      hahaha...that's right where my mind went, too.

      December 21, 2011 at 5:30 pm | Report abuse |
    • Yup


      December 21, 2011 at 5:35 pm | Report abuse |
  12. Karen

    This sucks!

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

    This is a systematic effort to defund Social Security. The $40 you save is a cut of $80 into OASDI because both the employee and employer portions are being cut. If you are under 55 you should not support this Payroll 'tax' cut because it is a plan to end Social Security in 10 years. After that, there will be no more payments into OASDI and no more Social Security benefits to those not already retired.

    What happens when both Democrats and Republicans want Social Security to go away? Answer: it goes away.

    December 21, 2011 at 5:24 pm | Report abuse |
  14. Brandy

    For those of you whining about how LITTLE $40 is, I'd like to say "Congratulations". I'm happy for you; happy that you're not in the bottom of the barrel like a lot of us. I can't afford to lose $40 from any part of my budget in a month. We walk, we use public library internet, we don't watch television. We have two little girls who need clothes and shoes- and who get their clothes and shoes second hand, and frequently even third or fourth hand, if it means that they have something to wear. We don't own our house, but we manage out rent- barely- every month.

    $40 is food. It's the water bill. It's the cost of my older daughter's winter-school clothes. It's the cost for my younger daughters' visits to the doctor to take care of her vaccinations. My husband's workboots cost anywhere from $40-$80. Even on sale.

    Yeah. I get it, some of you are lucky enough not to need to worry about the $40 missing, except for when you just want that little extra something. Meanwhile, those of us who struggle from one pay to the next, this is full of suck in ways you might be blessed enough to never understand.

    December 21, 2011 at 5:25 pm | Report abuse |
    • skarphace

      That is weird since you were not getting that $40 last year. Why is it all of a sudden so important this year?

      December 21, 2011 at 5:26 pm | Report abuse |
    • Brandy

      Skarphace: It's not just myself I'm talking about. There are a number of people in the same situation that I'm in, and a lot of nimrods around here who are going on about how small an amount $40 is. We were hurting for money last year, and the year before and the year before that... $40 would be help for us, and millions of others. Sad, but the truth.

      December 21, 2011 at 5:31 pm | Report abuse |
  15. Judy

    If $40 is gonna hurt, then those people are living way above their means. They need to re-budget and stop thinking they have to go out to eat, or have a cell phone with or without a data plan, etc. Living on Mac n cheese and cold cereal is part of life. I did it for many years as I saved to buy things I wanted. I didnt' go throw everything on a credit card so I could have it now. People need to learn that sacrificing one thing for another is just how it works for most people not wanting to be in debt.

    December 21, 2011 at 5:29 pm | Report abuse |
    • Kt84

      Perhaps they should also consider family planning as well (unless it's against their religion, in which case they should just pray to their god to get them out of the mess). Most people commenting mention their five kids – if you can't afford them then STOP HAVING THEM.

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