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. Jennifer

    Unfortunately, it doesn't matter what $80/month means to any of us. It's either going to be extended, or it's not. Being in a 2 income family, this actually means $160 for me and my husband. If $160 doesn't mean anything to you on a monthly basis, great. Not all of us are so lucky!

    December 22, 2011 at 9:45 am | Report abuse |
    • Ceridian

      If you and you husband are going to see a $160 month decrease in your take-home pay, that means your household income is at least $96,000 per year. What are you crying about?

      December 22, 2011 at 9:48 am | Report abuse |
    • James70094

      You are a two income family bringing in more than $100,000 per year and $160 per month is a big deal? You have made some poor choices regarding your finances. If you are taking in less than $100,000 per year, then it is not $160 per month to you and you don't really know the impact because you don't know how much it really is.

      December 22, 2011 at 9:53 am | Report abuse |
    • It's my money anyway

      It really bothers me to see 40.00 of my own money dangled in front of me. You know what gov't, keep it. I'll work another two hours of overtime, make 50.00 and pay 50.00 in taxes just so I don't have to read about a bunch of infants arguing over 40.00. Oh yeah, and I'm poor.

      December 22, 2011 at 9:56 am | Report abuse |
  2. Tabitha

    On my salary which has not increased in 4 years it will be an additional $22 taken out of my check (or $11 per week). I have a degree and I have a job in my field of study. I live in a small studio apartment with my husband who is quite ill and had to stop working in August. People have mentioned that you should cut your expenses if the 2% is going to be a burden, that you are obviously living above your means and yes I absolutely am. Rent, utilities, food, health and car insurance, and gas to work has me living beyond my means. Which of those should I cut? I have to have car insurance by law and if I were to get into an accident I am pretty sure the other party would want me to have car insurance. Gas to work? If I don't work I have no money at all. Health insurance? My husband and I both have chronic health issues (none of which relate to personal choices like smoking or poor eating habits, its just bad luck.) so we have to have health insurance or we will be one of the families that people complain about not paying their medical bills. Food is expensive. Ramen noodles are cheap but have ton of sodium, very little to no nutritional value, and quite a bit of fat (I believe a package has 16g of fat). Also it tastes awful. Fruits, veggies, and lean cuts of meats are very expensive and some people can not afford them which is why their health sucks and why later in life they will have higher health bills. So that's the ultimate catch-22, do we help people afford healthy choices now or do we pay for their poor choices later? I already live in a tiny studio, I don't even have a bedroom, the only way I can lower my housing costs is to become homeless.

    My health insurance went up $10 a week so I didn't get to see the benefit of the 2% decrease last year but I will certainly see the harm of the decrease.

    December 22, 2011 at 9:46 am | Report abuse |
  3. Brad

    It means nothing to me if it means that we continue as a nation and a government to live beyond our means. We need to get our budget house in order – period. That means going after all of the "sacred cows".

    December 22, 2011 at 9:47 am | Report abuse |
  4. Don

    And STFU about Texas, you have no state income tax. All the revenue comes through your property taxes. I paid $11,000 in state income tax plus $7,000 in property tax last year alone in NJ, so you get no sympathy over $3600 in property taxes

    December 22, 2011 at 9:48 am | Report abuse |
    • Hojo

      Sounds like you need to move

      December 22, 2011 at 9:55 am | Report abuse |
  5. NewsAnalyzer

    My fellow Americans,

    01. How did the politicians + CNN come up with this strange "$40 per paycheck" being lost without Congress/Senate extending the "tax cut"?

    02. CNN + politicians are using a "typical" $1000 per year in tax savings over 1 year as the basis for their calculations.

    03. This means $1000/12 months (if paid monthly) = $83 per month in saved Social Security tax per paycheck

    04. This means $1000/52 weeks (if paid weekly) = $19.23 per week in saved SS tax per paycheck

    05. This means $1000/26 pay periods (if paid every 2 weeks) = $38.46 per paycheck (ROUND UP and it becomes $40 per paycheck)

    06. This means $1000/24 pay periods (if paid twice a month) = 41.66 per paycheck (ROUND DOWN and it becomes $40 per paycheck)

    07. However, the $40 is VERY MISLEADING in its use by both CNN and politicians. The real fact is that people are saving 2% in tax (Social Security tax).

    08. Examples:

    .......a. If you make $100K per year, you save about $2000 per year in tax
    .......b. If you make $75K per year, you save about $1500 per year in tax
    .......c. If you make $50K per year, you save about $1000 per year in tax
    .......d. If you make $25K per year, you save about $500 per year in tax
    .......e. If you make $10K per year, you save about $200 per year in tax

    09. So, to ALL the members of the Senate and Congress: Do you give a damn about the 99% of us?

    10. Merry Christmas to the 100% of Americans (yep! including the 1% of Americans). I still believe in the American Dream and the abilities and resolve of my fellow Americans.

    Peace, Love, and Freedom to ALL!

    December 22, 2011 at 9:49 am | Report abuse |
    • Ronald

      This is true. The people that make $250,000 a year are going to lose just over $90 per paycheck. Why isn't there an article about what $90 means to you for us? This is all very misleading.

      December 22, 2011 at 9:52 am | Report abuse |
  6. CPP

    Ok, let's get a little more realistic. Currently employees are getting a 2% tax break on what they pay to FICA (Social Security). This is only taxed on income up to about $107,000. For someone making the federal minimum wage of $7.25 per hour, who works full time, your savings from this tax break is about $25 per month, or roughly $6 per week. Granted, that is 2/3 a can of baby formula, or maybe a cheap bag of diapers. It is certainly not enough for those who truly need it, and far too little for the government to be at such odds about. Personally, I think they should have to work through the holiday to get it worked out..... as many Americans would have to do in their own jobs. Let's stop placing blame and fix the frickin problem.... we can play the blame game later.

    December 22, 2011 at 9:50 am | Report abuse |
  7. garwin1

    I'm so broke that my kids are getting cut out magazine pictures of Christmas presents, I'm carving 2 packs of bologna into the shape of a turkey, and little Horace isn't going to get that wooden leg again this year.

    December 22, 2011 at 9:51 am | Report abuse |
  8. Bill

    I love this tax cut! I would much rather take the extra $40 per pay check and invest it in an IRA. Let me keep all my social security money so I can have a better retirement!

    December 22, 2011 at 9:52 am | Report abuse |
    • Daunte

      Bill, the whole reason that we have social security is because most Americans are too IRRESPONSIBLE to save for their own retirement so the government has to force them to do it. Otherwise all the old people would be broke freezing to death on the streets. I personally think that once you have over $500,000 in a retirement fund, you should not have to pay social security anymore. I'd rather take the extra $7,000 a year and invest it on my own.

      December 22, 2011 at 9:54 am | Report abuse |
  9. Worker

    Have congress work for minimum wage. That will save the governement a bit of money and then they can go back to figuring out how much the 40 dollars will affect the economy.

    December 22, 2011 at 9:52 am | Report abuse |
  10. Nate Cloutier

    *news analyser* isnt thqat a bit much lol? but anyway 40$ is the money i use to get to school every week.

    December 22, 2011 at 9:53 am | Report abuse |
    • Ceridian

      Everyone needs to step back and calculate what the true impact will be on them.

      Take your annual pay and multiply it by 2%. Then divide that number by the number of paychecks you receive each year. That is your decrease in take-home pay per paycheck. The $40 number does not apply to a majority of Americans.

      December 22, 2011 at 9:56 am | Report abuse |
    • JackStewart

      Everyone needs to step back and calculate what the true impact will be on them.

      Take your annual pay and multiply it by 2%. Then divide that number by the number of paychecks you receive each year. That is your decrease in take-home pay per paycheck. The $40 number does not apply to a majority of Americans.

      December 22, 2011 at 9:57 am | Report abuse |
  11. Nate Cloutier

    *news analyzer* isn't that a bit much? but anyway 40$ is the money i use to get to school every week.

    December 22, 2011 at 9:53 am | Report abuse |
  12. Jon

    $40 bucks means a lot to me to. But I guess this is a small price to pay for pay for this country to back on track. $40 of tax is just going into the pockets of lazy people that do not want to work or providing for illegal aliens in our country.

    December 22, 2011 at 9:54 am | Report abuse |
    • Nate Cloutier

      Exactly, so many Americans are on welfare and just getting by although they do nothing to change it because there happy of their lazy ways and cant get up and make a few dollars for themselves at least try to support yourself and your family don't just sit idly by while everyone else pays for your life.

      December 22, 2011 at 9:56 am | Report abuse |
  13. OnABudget

    $40/paycheck or $80/month is what determines the type of groceries I can buy. The extra money allows me to eat healthy instead of going on instant noodles....

    December 22, 2011 at 9:55 am | Report abuse |
  14. Gibson5150

    Hey Gov't! Raise the tax on your 6 figure income people to 2% or more.out of $1.000.000 that would be $20.000! To the people of congress & of the house i wanna know how you evan made it through school & who you slept with to get your job's.

    December 22, 2011 at 9:55 am | Report abuse |
    • Mortimer

      Oh, another "tax everyone but me" guy. You take such a tough stance. By the way, have you ever voted? That's how people get into office. I'm sure you made good choices.

      December 22, 2011 at 9:57 am | Report abuse |
    • Gibson5150

      Even sorry typo.

      December 22, 2011 at 9:59 am | Report abuse |
    • Gibson5150

      Hey! I live paycheck to paycheck. I have nothing left over everyweek And it is getting hard to have enough gas everyweek to make it to payday so i dont have the extra $40 to give. And $40 is almost a tank of gas. Sorry Gov't i just dont have it.

      December 22, 2011 at 10:03 am | Report abuse |
    • Mortimer

      Well, if you are going to be paying $40 extra a week because of this it means you make $96,000 per year. Don't let this misinforming article scare you. It is a sliding scale and the way they put it out there is horrible.

      December 22, 2011 at 10:06 am | Report abuse |
    • Gibson5150

      Mortimer! You must be the guy from trading places the wall street guy right?I bet you make alot of money thats why you dont like what i have to say huh? Your going to be out more then me.well i hope like in the movie you loose your seat.

      December 22, 2011 at 10:09 am | Report abuse |
    • Motimer

      Yes, I do not like what you are saying because you are saying that the government should take my money and give it to you. I don't know you so I am very much against this.

      December 22, 2011 at 10:12 am | Report abuse |
    • Gibson5150

      Sorry but what i'm taxed the rich should get the same. No breaks. i pay 2% you pay 2%. Fair is fair & that is that. Maybe everyone should have to live middle class & they should take the lux out of lluxury for some people.

      December 22, 2011 at 10:18 am | Report abuse |
  15. James

    Irresponsible journalism, once again CNN. The answer to the question "What $40 does for me" is completely irrelevant. You fly your bias flag with this question, just more subtly than the other networks. The fact is, it doesn't matter what $40 does for me, if it's not right for me to take someone else's $40, then I'll figure out my own way. You mention co-pays going up to $40 for one individual, why is that happening now? Could it be the adjustments required by insurance companies and small businesses to compensate for Obamacare? If you thought healthcare was expensive, just wait.
    And besides, at what point did the White House and Dems turn out to be tax cutters? Campaign nugget. Stop and think, THEN write. For shame, CNN. For shame.

    December 22, 2011 at 9:57 am | Report abuse |
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