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. whobeehe

    Tax cut = $20 more per week to spend at Walmart to buy cheap imports with money that eventually ends up in China.

    Chinese do a national chest bump each time the American working class gets a tax break.

    Congress and President are clowns. They don't understand economics and are not qualified to make decisions on what is best for the American economy.

    It's better they do nothing at all than make things worse.

    December 22, 2011 at 10:39 am | Report abuse |
  2. Blanche

    OK, so let's say I get my $120 a week 75% of the time and $130 a week the other 25%. Assuming an 52 even weeks a year for simplicity's sake and not counting any fluctuations due to holidays for the same reason, let's see what my Social security difference per week would be without a tax relief extension => (($120*.75+$130*.25)*52*.062 – ($120*.75+$130*.25)*52*.042)/52 = $2.45. That isn't as bad as I thought.

    December 22, 2011 at 10:39 am | Report abuse |
    • SpongeBob

      If everyone would stop and do a similar calculation before they post comments on here, they would realize it is not nearly as bad as the media is making it sound. Yes, it sucks.

      December 22, 2011 at 10:43 am | Report abuse |
  3. SR

    The spin on this is incredible. It is 40.00 per check for a 50,000 per year family income. I see many posts of people making far less looking at this from a perspective of their check being less than 40.00. This is not mathematically correct and misrepresents the truth – once again.

    In regard to the tax cut – it was supposed to be temporary from the beginning. While I will be sad to return the money, the reality is that somewhere, somehow, someway money has to be spent to fund the government. Until the government cuts spending and reduces the deficit – I can't see how this is sustainable. The government can't keep giving away money from the folks that work to the folks that don't. The math for this formula doesn't work out either...

    December 22, 2011 at 10:40 am | Report abuse |
    • charlie

      I agree – why take money from another federal source to pay this tax holiday. just retore the 2.0% tax to the FICA.

      December 22, 2011 at 10:54 am | Report abuse |
    • Nancy

      give my 40.00 to re-elect Obama. So sick of the GOP and their unreasonable ways.

      December 22, 2011 at 11:05 am | Report abuse |
    • The Fume

      OUR money was also used to fund the bank disaster. That's the money that funds OUR gov't. $40 is alot of money to people these days especially when wages never went up but gas, food and housing costs did.

      December 22, 2011 at 11:15 am | Report abuse |
  4. Texdoc

    It's my retirement money. Why are they not putting it in a lockbox? This is like not paying a credit card bill and calling it a payraise.

    December 22, 2011 at 10:41 am | Report abuse |
  5. johnny popper

    What a scham. The reality is Congress and anyone pushing for this reduced moeny going into social secuirty should be reprimanded.

    If Congress and the President wanted to truly save the average American money, they would simply cut spending in 2012 by 120 billion (too easy and not politically advantageous) or cut INCOME TAXES by 2% (not a retirement savings program – social security – in theory, before Congress messed the whole program up – it was supposed to be a retirement savings program) and....AND cut govm't spending in 2012 by 120 billion to break this whole deal to even for the average American or even better yet, cut income taxes by 2% temporarily and the 2012 spending by 240 billion. Then, when Congress and our niave President run around the country mingling with common folk, they would be telling the truth that the progam was saving them $1,000 a year.

    This whole thing is just the latest example of a sad government run by a bunch of lame people who really just want to make political hay and not really help us.

    For the record, I thought bush was sad and lame too.

    December 22, 2011 at 10:44 am | Report abuse |
  6. Barbara

    I have been unemployed for 17 months...I am more fortunate than some, my spouse has a job with a decent paycheck. Even though we are not going hungry, $40 a month is equal to a prescription drug copay...when times are tight it is sometimes tempting to go with out that prescription, or to cut down on your dosage to try to stretch the medicine out to save money. It's not smart, but sometimes you have to make tough decisions. Congress doesn't understand making tough decisions...when they are faced with tough decisions they have proven time and again they revert to party lines and refuse to think about the hard working Americans they are elected to represent. Cut money to those who need it the most is not going to create jobs, stimulate the economy, or reduce the need for welfare assistance in this country.

    December 22, 2011 at 10:45 am | Report abuse |
    • mycoke

      You are not making $50,000 ($25 hr) so you would not lose $40. More likely, your tax refund is more than you pay in taxes, so be happy and quit complaining.

      December 22, 2011 at 10:50 am | Report abuse |
  7. Marv Volz

    This $40 in effect is only a loan from the S.S. fund, meaning it'll have to be paid back or your SS retirement will be less. There's no free lunch!

    December 22, 2011 at 10:45 am | Report abuse |
    • The Fume

      Tell that to the big banks that scammed OUR tax money. They are laughing so hard at us right now. They don't have to worry cause they get bailed out. So how come AMERICAN TAXPAYERS can't get a bailout?

      December 22, 2011 at 11:18 am | Report abuse |
  8. Susan Ciconte

    If people can't adjust their lives to part with $80/month, then I think they have a problem with their finances. $20/week. How many of you smoke cigarettes? How many of you are constantly running out to a mall? Stop taking your kids to the grocery store and buy less. What they don't see won't hurt them. Also, cut out the cable for the TV. Internet is necessary, but learn to live with less media. Maybe let your hair return to its natural color for once instead of the $80 hair dye jobs monthly.

    December 22, 2011 at 10:50 am | Report abuse |
    • Mo

      Darned right Susan! If you are poor, at least act poor, look poor, and do it responsibly.

      December 22, 2011 at 10:58 am | Report abuse |
    • The Fume

      Are you serious? You say cut back on food costs by not bringing the kids shopping and then say the INTERNET is necessary?? The internet is not a necessity. What did you do BEFORE the internet?? geez

      December 22, 2011 at 11:21 am | Report abuse |
  9. fauxguy

    Why don't they leave the tax where it is and raise the maximum contribution. That would put the burden on the people that benifit the most from a strong economy.

    December 22, 2011 at 10:52 am | Report abuse |
    • B.Emmenegger

      I think the reason for that is because SS payouts are only so much. If you had it on unlimited income, people with high earnings would be putting in so much they would warrant $10,000 monthly checks from Social Security. That is obsurd. The point it to make sure people have enough so they arent broke in retirement and to let them do what they please with the rest of THEIR money.

      December 22, 2011 at 10:55 am | Report abuse |
  10. Kurt

    This really won't effect me. Last January when this went into effect, I changed my 401k contribution from 15% to 17% and my pay remained the same, all the while intending to lower it back down when the SS holiday was over.

    December 22, 2011 at 10:53 am | Report abuse |
  11. LabRat

    IT IS NOT A TAX CUT

    All this tripe over Payroll Deductions....NOT TAXES.

    If you owe taxes at the end of the year, you will still pay them.

    If you don't owe taxes at the end of the year, your refund will be reduced.

    WHAT INSANITY!!!!

    !!!!ALL YOU NEED DO IS ADJUST YOUR W4 FORM AND TAKE ONE MORE DEDUCTION!!!!

    And this is what the Classic Misdirectors in Congress won't even say! They don't want you to realize that they are TOTALLY INCOMPETENT and are a WASTE OF GOOD AIR.

    JMO

    December 22, 2011 at 10:54 am | Report abuse |
    • B.Emmenegger

      That statement is totally false, and more misleading than this article. It is an increase from the 2011 Social Security contribution of 4.2% back to the historical contribution of 6.2%. It is real dollars for people.

      December 22, 2011 at 10:57 am | Report abuse |
  12. Aziz Merchant

    The very same people who are crying over $40 will cry again when they retire. Do you realise that the very $40 are being taken out of the "non-existent" social security benefit? If you are really hurt by $40, budget your life accordingly. Stop wasting your money on alcoholic drinks and cigarettes if you can. Stop dring gas guzzling SUVs and move to a smaller car. Stop eating out everyday and eat cook fresh food at home. Support local stores. That is how you will really make a difference. The money saved and spent within your local community will go a long way in improving your life style.

    I am not a rich republican and I will be affected if the payroll tax is not renewed. However, I am thinking with my brain. The long term affects of $40 will be devastating.

    December 22, 2011 at 10:57 am | Report abuse |
  13. Henry

    It means that Social Security gets whacked again. Apparently the senior citizens are the easiest for the politicians to fleece and call it a tax break for the middle class. Senior citizens should turn away from the Democratic Party. With them, Social Security really will go bust.

    December 22, 2011 at 10:57 am | Report abuse |
  14. Larry of Boston

    CNN does great harm to this country with these sort of marshmellow questions -- it comes very close to inciting revolutions - Ease up CNN - try reporting the full story –like we are $15 trillion in debt already; Social Security is going broke and this reduces funding for Social Security; and that if you talk to the business owners, this policy will NOT& create new jobs

    December 22, 2011 at 10:59 am | Report abuse |
  15. Larry of Boston

    Maybe the fat cat Dems should give up a few donuits a day – this would elminiate the need foe the $20 (NOT $40) a week that this tax holidy represents. And whatever happened to the initial vote on this when Obama approved a 1 year hoiiday only and he knew when he approved this that it would expire automatically? This is not9ing more than a Democtaric-Obama campaign stunt

    December 22, 2011 at 11:01 am | Report abuse |
    • Aziz Merchant

      Larry of Boston, the article specifically states $40 bi-weekly. Read the article again or refresh on your math. Oh wait, Republican and Math does not go well...I forgot.

      December 22, 2011 at 11:02 am | Report abuse |
    • Bobert

      So it does...they changed it about an hour ago...this had been posted without that since yesterday.

      December 22, 2011 at 11:04 am | Report abuse |
    • Eric M.

      In that case, my apologies. However, I still stand by my theory of not extending the payroll tax credit even though I am a democrat. We need to stop political shenanigans and work towards one America. The great country that once was the land of opportunity. The great country for which, I left my country and my culture.

      December 22, 2011 at 11:14 am | Report abuse |
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