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. Bookenz

    Arguing over $40, what a joke. The wealthy tip their pool boys more than this.

    December 21, 2011 at 6:10 pm | Report abuse |
    • skarphace

      Actually, we are talking about $80 since both the employer and employee portions of OASDI are being cut. And this is $80 per worker that makes around $50,000 per year (if we are talking about biweekly or semimonthly paychecks). This is quite a substantial cut of OASDI revenue and will only work to defund Social Security faster than previously predicted. It is a bad policy and should be scrapped if we intend on saving Social Security for the future.

      December 21, 2011 at 6:17 pm | Report abuse |
    • MichiganMoon

      Yes, shame on some people for not wanting to defund Social Security to the tune of $10 Billion Dollars...I mean 2037 when SS runs out of money if nothing changes is a long ways off. We need this Pay Roll Tax break, who cares if the solid majority of the $$$ will go to the top 10%. $5.80 per week for 2 months will trickle down to minimum wage workers!

      December 21, 2011 at 6:20 pm | Report abuse |
    • skarphace

      Michigan: your argument is flawed. That 2036 number was at current revenues. Since those revenues have been cut, it will be defunded quite a bit earlier. If we keep or increase this 'tax' cut, it will be defunded as early as 10 years.

      December 21, 2011 at 6:29 pm | Report abuse |
  2. Roman

    Time to save up for a cabin and live in the Poconos far far away

    December 21, 2011 at 6:16 pm | Report abuse |
  3. MichiganMoon

    The public: "We want Social Security and we want good benefits and not at too old of an age"

    The public: "We also want to defund Social Security so we can keep 2% more of our money to help the poor so that a minimum wage worker can get $5.80 per week for 2 months, the rich get most of the tax break, and Social Security that will be out of money by 2037 will lose $10 Billion.

    This is why our country is failing.

    December 21, 2011 at 6:17 pm | Report abuse |
    • skarphace

      Exactly. Well put. Greed now only hurts us in the future.

      December 21, 2011 at 6:22 pm | Report abuse |
    • Zen

      $40.00 is lunch money for the Repubs!

      December 21, 2011 at 6:30 pm | Report abuse |
  4. stupid redneck

    hey yall, I work part time at an auction barn.. I don't earn that much and if they take my 40 smackeroos i caint make no more paiments on my Ford powerstroke diesel duely. this is BS. Wont be having enough food for the youngins neither.

    December 21, 2011 at 6:18 pm | Report abuse |
    • septocaine

      Maybe a 2007 F150 plain wrapper, a lower car payment and money to spare. An F250 dually? Are you kidding me? More of the buying what you want, and begging for what you need mentality. This is why the rest of us are saying, cut up your credit cards, learn to live within your means. Seems you always got enough gas for a 40 gal tank and 15mpg, but not enough to feed your kids. Please.

      December 21, 2011 at 6:34 pm | Report abuse |
  5. Ancient Texan

    Two months extension = $167. One year extension like the GOP is trying to do =$1000. Why is the House wrong.?

    December 21, 2011 at 6:19 pm | Report abuse |
    • GeneK

      They wouldn't be, if they weren't also trying to defund the EPA and the healthcare act in the same bill.

      December 21, 2011 at 6:28 pm | Report abuse |
    • Chaos

      Because they insist on adding pet pork projects. Obama wanted a straight year and straight cut. So didn't Senate Democrats and Republicans. The House Republicans don't. Its that simple. You simpleton.

      December 21, 2011 at 6:30 pm | Report abuse |
  6. HenkV

    The $40 means for me that I am stealing some more money out of my children's piggy bank.

    December 21, 2011 at 6:20 pm | Report abuse |
  7. septocaine

    What it means is this – help balance the bankrupt budget, caused by all the stupid social spending programs, bank bailouts money-printing frenzy. Either get on board or get in line for more handouts – POTUS will print more for you sucking leaches.

    December 21, 2011 at 6:20 pm | Report abuse |
  8. skarphace

    If the average worker makes $30,000, then extending this 'tax' cut would result in an annual savings of $630 (30,000 * 2.1%), or just under $12.12 per week. However, it would cut OASDI revenue by nearly $100 per worker per month ($12.12 * 4 * 2, since both the employee and employer portions are being cut). Quite a steep price to pay in the future.

    December 21, 2011 at 6:20 pm | Report abuse |
    • Notinagreement

      Not sure where you get your info. The cut is 2% from the employee, the employer did not get a matching cut and still pay 6.2%. I don't recognize your acronym, but this cut comes out of FICA. I am a payroll processor, so yes, I know my numbers are correct.

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

      You are right. The cut was only to employees.

      OASDI is a portion of the FICA tax. FICA is made up of two taxes: OASDI (Social Security) and HI (Medicare). I am surprised that as a Payroll professor you do not know that.

      So I guess we are even for this argument. 😉

      December 21, 2011 at 7:46 pm | Report abuse |
  9. piggy bank

    Why do you have kids, if $40 is the sum of your expendable income? just sayin

    December 21, 2011 at 6:22 pm | Report abuse |
  10. Cheryl

    If everyone is so worried about social security why don't we tax the rich and let them pay for it...don't fund it all on the back of the middle class.

    Also why are those against government sponsored healthcare for all such BIG supporters of government sponsored retirement? I

    December 21, 2011 at 6:22 pm | Report abuse |
    • MichiganMoon

      Only 53% pay federal income taxes...I agree...lets make it so only the top 10% pay any taxes at all...this would be sustainable.

      December 21, 2011 at 6:24 pm | Report abuse |
    • skarphace

      Michigan: FIT does not fund Social Security. OASDI does. Different taxes.

      December 21, 2011 at 6:27 pm | Report abuse |
  11. Jonathan Adamec

    Ron Paul 2012......if he isn't elected I'm fleeing the country....have fun in your nanny/authoritarian state my fellow Americans

    December 21, 2011 at 6:23 pm | Report abuse |
    • skarphace

      I intend to vote for Ron Paul as well. However, I think I will stick around. Things are bound to get interesting.

      December 21, 2011 at 6:25 pm | Report abuse |
  12. douglas mcdonald

    Who is doing the math here. $1000 would be $19.23 per week for 52. Is the Media and the people being interviewed
    that ignorant to think some one won't catch it . Maybe they one should stop and due the math be for they get excited.
    I cant imagine that they get paid every 2 weeks. Why does the media push this false information.

    December 21, 2011 at 6:24 pm | Report abuse |
    • skarphace

      However, if you are talking about biweekly or semimonthly paychecks, then the $40 is pretty spot on for an annual income of $52,000.

      December 21, 2011 at 6:26 pm | Report abuse |
  13. Jutka

    The rich gets the billions, poor $40 bucks for two months. America is very close to become a third world country.

    December 21, 2011 at 6:24 pm | Report abuse |
  14. Gord

    We should STOP SPONSORING the luxury lifestyle of the rich.

    December 21, 2011 at 6:26 pm | Report abuse |
    • MichiganMoon

      Then let's oppose this. It harms social security (helps poor more than rich) while giving most of the money to the top 10%.

      December 21, 2011 at 6:28 pm | Report abuse |
  15. LtlTrolup

    $40 is nothing to me. I will just flirt more and get more free dinners from all the husbands out there. They take better care of me than they do their wives and children. It's them. It is not MY fault.

    December 21, 2011 at 6:28 pm | Report abuse |
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