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. IndianaDobie

    This was a temporary tax cut. You didn't have this money a year ago and everyone survived just fine – but suddenly this is the end of the world? Give me a break. Temporary tax cuts end!

    December 21, 2011 at 7:06 pm | Report abuse |
    • John

      Thank you! I wonder how many of these people who complain about the $40 have xBoxes, Netflix, and eat at a restaurant at least twice a week.

      December 21, 2011 at 7:22 pm | Report abuse |
    • kutta

      I totally agree,its peanuts ,people just have a habit of whining while they spends hundreds on useless things.

      December 21, 2011 at 7:24 pm | Report abuse |
    • AC

      The Bush tax cuts were supposed to be temporary too.

      December 21, 2011 at 7:27 pm | Report abuse |
    • RelaT

      It means money for my son at college to eat......! I no longer have a Netflix account.....etc. Also, I finally received a 2% cost of living raise "this" month, after waiting for 2 years for that help. Wow...,it was nice while it lasted......ha! It also means less money in my daughters college fund, or my retirement fund.....
      I am tired of our government giving hand outs that it does not have the funds to give. America has been tightening its belt for a couple of years now...., maybe congress should try that too.

      December 21, 2011 at 7:35 pm | Report abuse |
    • john

      Except for temporary tax cuts for the wealthy, which evidently are permanent..

      December 21, 2011 at 7:42 pm | Report abuse |
  2. Jamie

    40.00? To some thats nothing, to the rest of us thats quite a bit of money. We might as well just give the government all the money we make so they can live comfortably and happy while we suffer. I've lost hope in the u.s. 🙁

    December 21, 2011 at 7:07 pm | Report abuse |
    • richard.

      agree, first 50k you make goes to the govenment. after that you keep it all.

      December 21, 2011 at 7:08 pm | Report abuse |
  3. RC

    To clarify what some seem to have missed, this isn't a one-time tax of $40; by the calculations given, it's around $80 per month for the average family. Granted, if you are getting a 6-figure salary, a $1,000 per year tax seems small. If, however, you're like Selena Campbell in the article, that $40 represents nearly a week of groceries.

    It's easy to criticize the person for whom $40 makes or breaks the month - but this country is made up of micro-economies where average incomes vary widely. The average annual income in some rural areas can be as little as $16,000, but the cost of living is not comparably cheap. In certain metros like Palo Alto, CA and Manhattan, the average is much higher, and $40 represents a more trivial piece of the monthly pie.

    On the other hand, consider this: the $40 is based on taxes for the "average family." Perhaps your family is in a higher tax bracket, and the tax break you would lose could be much more than that.

    The people this would most seriously hurt are those in the lower income brackets who would be hard pressed to deal with even a $20 per paycheck tax increase.

    December 21, 2011 at 7:07 pm | Report abuse |
    • George

      Yes - but the person making $16000/year doesn't lose $40 per paycheck. They lose $320 for the year - around $13 per pay check. Amazing how many people here expect the government to pay Social Security but are unwilling to contribute towards it.

      December 21, 2011 at 7:31 pm | Report abuse |
    • Joeymom

      And $13 to someone making $16000 a year is still a lot of money. Ever live a life with no hoping of affording fresh food?

      December 21, 2011 at 7:36 pm | Report abuse |
  4. Brad

    Folks, I know on the surface it appears the Republicans are obstructionists again but this is, yet, another sleazy maneuver on the part of Democrats and the President of the United States to get reelected in 2012.

    Think about it, why in the_HELL_are they even wasting valuable time negotiating a 2-MONTH extension; a paltry 2-month extension??? So in 60 days the Congress can go back to the same god-forsaken issue and drain more time away from other serious issues going on. Every December under the Obama administration is some type of manufactured “crisis”. Individuals and businesses simply CAN’T plan ahead under the Obama administration. That is why we are now living in an economy where more and more people are ‘fleeing’ the job market rather than ‘joining’ it, which is the MAJOR factor as to why unemployment rate dipped to 8.6%.

    Obama’s only chance at winning the presidency again is to run against a “do-nothing Congress”; and those are the words from the Almighty Obama himself.

    December 21, 2011 at 7:09 pm | Report abuse |
    • Frank Pierce

      Ouck Fobama

      December 21, 2011 at 7:18 pm | Report abuse |
  5. Mike

    Guys don't forget this isn't "your money" this is SS money that we have been paying in for ages. It was decided that we would pay less of a rate for awhile – this is not less money in your wallet you have had more money in your wallet for 2 years.....

    December 21, 2011 at 7:12 pm | Report abuse |
    • Ashley

      Mike – not really – I'm a small business owner and while my employees got the tax break, we as the employers did not – I actually had to pay more in for SS and Medicare – just thought you'd be interested in that. And another interesting tidbit – I pay my people first – if there's anything left over – that's what I get it and believe me, it's not much...

      December 21, 2011 at 7:27 pm | Report abuse |
  6. Mell

    You can think about prioritizing. I don't understand why people are so obsessssed with pets when they have children to feed. If you can't afford the pet.. don't have one. Children come first!

    December 21, 2011 at 7:13 pm | Report abuse |
    • Mike

      and don't have 8 children when you can't pay for them would be another point based on the article

      December 21, 2011 at 7:14 pm | Report abuse |
    • Nofakingway

      What article did you read?

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

    Retroactive fix is better than a 2 month fix. The 2 month fix will wreck havoc on companies and cost a ton to implement as it comes with a bunch of conditions and limits. Fix the problem or not don't bandaid it

    December 21, 2011 at 7:13 pm | Report abuse |
  8. GERRY HALL

    FIRE CONGRESS!! then hire 2 democracts, 2 republicians, 1 independent off the street if need be. they know what the people want, need and will do. i think they could take care of the problem the congress is bickering about in about 3 days,( and not enact it for 2 months, but 1 year) they could work for 40 hrs per week, for 3 months. then next year, hire 5 different ones.continue this for 5 years and the budget would probably be balanced, because they wouldn't worry about re-election, lobbyists, or retirement perks. this is the way it was originally set up for anyway, not for it to be a career, and receive pensions, and secret service protection and so forth. try it. how much worse could it be than what we have put up with the past couple of years?

    December 21, 2011 at 7:13 pm | Report abuse |
  9. George

    Lets clarify some things here. $40 is based upon a bi-weekly paycheck. Actually its more lik $19 per week (gross). Then when its taxes as regular income its more like $15. So no, it's not that much. Just some more CNN, left wing propoganda.

    December 21, 2011 at 7:16 pm | Report abuse |
  10. DanTheMan

    Cut back on expenses, only buy what you need, not what you want. We stopped eating out at restaurants which saves us hundreds of dollars a year. Take a sack lunch to work. We walk our kids to school most every day. Assist people in need to get some quick cash and with your skills such as painting a room in their house, helping them clean their house or with yardwork, etc. I got a few hundred dollars a few weeks ago to help care for our neighbor's yard this winter while he's in FL. We had a garage sale and made some good money getting rid of stuff we simply did not need.

    December 21, 2011 at 7:17 pm | Report abuse |
  11. fearmonger

    $40 that's a tank of gas, bottle of water and a kit kat. Oh wait... I've been unemployed for 3 years. $40 is nothing to me...

    December 21, 2011 at 7:19 pm | Report abuse |
  12. George

    Most people don't know what they are arguing about. The $40/paycheck assumes that you earn $50,000/year and are paid 25 times per year (slightly less than semi-weekly and slightly more than bi-monthly). Unless you cannot manage your finances, few people making that kind of money won't be able to handle that kind of cut especially since, until this year, they weren't getting that money anyway. The agony described in this article seems to apply to people making closer what to I make - $30k a year. I will lose $600 for the year - about $50 per month. While it stinks, it makes no sense for the government to give out tax cuts without cutting the spending given it spends $3 for every $2 of tax revenue right now. Also, most people I know waste far more money on their coffee, cell phone, cable TV and so forth. All of those are luxuries enjoyed only by the top 2-5% of the world's population. The complaints on this board are absolutely absurd, and the statements in the article are grossly misleading.

    December 21, 2011 at 7:22 pm | Report abuse |
    • Joeymom

      Unless you are paying for disability services for your child, which can run $100/hour around here. With my health insurance, bless them, it is only $40 a session for us, three time a week for one child, twice for the other. Oh, and I also like to be able to pay my mortgage, my electric bill, and my water bill. Were you aware that $44K for a family of four is poverty level? Being just out of poverty level means that $40 can mean a LOT to you!!!

      December 21, 2011 at 7:31 pm | Report abuse |
  13. wow

    When people are crying over $40 its time to flee America. Clearly the masses are too stupid to manage their own budget equally as badly as the Gov. I'm willing to bet if Ron Paul isnt elected this season all the smart money will be relocating to another country.

    December 21, 2011 at 7:23 pm | Report abuse |
    • Joeymom

      Actually, being upset about taking $40 every two weeks out of my budget means that I AM BUDGETING. That is a GOOD thing.

      December 21, 2011 at 7:27 pm | Report abuse |
  14. someguy

    It means I have gas to get to school so I don't miss 3 days like last semester and get dropped a grade letter. It means maybe I can have something other than hotdogs and ramen to eat and maybe more than 1 meal a day since every job I get that will fit in my school schedule constantly cuts my hours until I have to find another.

    December 21, 2011 at 7:24 pm | Report abuse |
  15. Joeymom

    $40 is an occupational therapy session or a speech therapy session for my child. Letting me have that $40 a paycheck now may likely save you thousands of dollars in services in a few years, when my child can communicate effectively, take care of themselves effectively, and hold a proper job that allows him to also pay taxes, instead of being dependent on the taxes YOU pay.

    December 21, 2011 at 7:26 pm | Report abuse |
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