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. Latvia

    If I make less than $40 a week some weeks, does that mean I will owe someone money? I don't see the point of working if I am just going to have to make a payment after my shift.

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

      No, the tax is a percentage of what you make. $40 is just an example and is a figure derived from an average $50k a year salary. Somewhere around there. So you'r actual tax would be less than $40.

      December 22, 2011 at 11:14 am | Report abuse |
  2. Kate MacKenzie

    Amazing how many people are willing to write off the difference a small amount of money in a paycheck can make. I am guessing a lot of people posting aren't having money troubles or lack empathy. I know I am one of the lucky people who can afford to not have the extra money in my pocket and will survive. But for those who are budgeted so tightly due to one spouse being out of work for a prolonged period or single parents, that money can make or break them. And in a lot of cases, they have cut the extraneous costs and are down to bare bones. Whether or not you agree with the cut, argue your point on policy and leave out the Walmart comments. I am not naive to believe there are people out there who don't plan well but to write off all struggling Americans as slackers is just wrong. A lot of people need that extra money to keep a float. $80 a month to a family of four on $50K is a lot. It's groceries, gas money, car insurance, day care so parents can work, ect.

    December 22, 2011 at 11:06 am | Report abuse |
    • Alison

      The problem is (and this is my opinion and, admittedly, a generalization) a lot of republicans have no empathy for others, which is what enables them to vote in the manner that they do. Look at a lot of the things they're against! The health care bill, welfare, etc... all things that benefit others and help struggling Americans and they think it's nothing but a handout. There are always going to be people that take advantage of the system or don't plan well, but you can't punish the people that REALLY need the help because some people found a loophole. They do not understand this.

      December 22, 2011 at 11:20 am | Report abuse |
  3. Kaye Long

    If they do not pass the payroll tax cut, I believe EVERY ONE OF THEM should immediately lose all their retirement benefits, health insurance benefits, and the pay they make above say..$40,000 yearly. Let those idiots on Capital Hill live off what the majority of American's are living on. Better yet, lower their pay to minimum wage and let them try to feed, clothe and shelter their families on what is left after the taxes and insurance is taken out. They would not last a WEEK!!!!

    December 22, 2011 at 11:11 am | Report abuse |
  4. Mark K

    This just shows that Washington doesn't get it. JUST FIX IT! I can't take this change anymore.

    December 22, 2011 at 11:13 am | Report abuse |
  5. gio

    It means half of my electric bill, it means lunch, it means filling up my car twice, it means, tmobile bill, it means internet bill, it means ALOT

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

    TJ. Disappointed in this morning's (7am PST) broadcast about the payroll tax debacle. I was NEVER able to understand WHY there is disagreement between the two parties other than the short- versus long-term solution. You never asked the Washington reporters what the issue is that is the real stand-off if both parties was the tax reform to be extended. What is the issue? Is it because of WHERE the money will come from to agree to a year-long extension?

    December 22, 2011 at 11:15 am | Report abuse |
  7. Steve Powell

    The average government draw If you include fed+state+local is over 40% of GNP. The economy is not going to improve siginificantly in the next several months. The point of the tax holiday was to give people a respite so they could get things in order. If we continue along this path of massive expenditures by governments at alll levels, we will be unable to address future economic crisis's or worse even take care of the needs of future generations.

    Everyone wants and demands a piece of the government pie. A sugested sustainable rate is 35%. So somehow we need to have governements at all levels figure out how to do everything for an eighth less. I have no problems with short term spikes in goverement spending. But if the stimulus is no longer working or the current level of economic activity is only being sustained by a stimulus being permanent, were better off facing the difficulties now instead of kicking the can down the road, as has been the habit of the EU.

    The problem is still there. If 40 dollars a pay period is that significant, here are easy things to get rid of. Get rid of your cable. Or get rid of your cell phone plans. Never eat out. Cook your own food from basic ingredients. Drop your thermistat 5 degrees in the winter and open your windows in the summer. Do not buy bottled water. The water out of tap is just fine for most of us. If you insist something is wrong with the taste, purchase a filter. It is much cheaper. And if you have a beer, cigi, or lotto habit, get rid of it.

    I am sure there are people who are doing all of the above and still have financial difficulties because of events out of their control. Good for you for trying and hopefully things work out. However, if everyone tried, there would be more money to go around to help those who really needed it. I know too many people unwilling to give up their luxuries and claim poor while they eat junk food, watch NFL football on the premier channel and yack on their cell phone.

    December 22, 2011 at 11:16 am | Report abuse |
    • Kevin

      Well said, but no one is listening probably. The people who are financial idiots and live paycheck to paycheck will continue to do so. We could increase their income $20 a week(the opposite of this debate) and a year from now they would still be living paycheck to paycheck.

      December 22, 2011 at 11:21 am | Report abuse |
    • Alison

      Some people only make enough to live paycheck to paycheck and it's not because they're idiots. Life is expensive.

      December 22, 2011 at 11:31 am | Report abuse |
  8. Tim

    It is not $40 that you will lose, it is $80 a check because you have to still buy the gas or food etc.. It works like this- if I get $40 less in my pay, I have lost the $40 but I still have to have the gas so I have to put the $40 out of my pocket to buy it, so I really lose $80 total.

    December 22, 2011 at 11:18 am | Report abuse |
    • Kevin

      What type of nonsense math are you using? If the payroll tax ends, it doesn't increase your bills. Right now, whatever you pay for gas, electric, water, etc will be the same if the payroll tax cut ends. So you're only going to lose $40 every 2 weeks. There is no $80 about it no matter how you do the math.

      December 22, 2011 at 11:25 am | Report abuse |
    • Matt

      No, it's still $40. You're spending that $40 on gas either way it just depends on whether it comes out of you check or your pocket. It's NOT a double cost.

      December 22, 2011 at 11:36 am | Report abuse |
  9. Pierre

    Just think how much more of OUR money we would have to spend if those socialists in the White House actually passed a year long extension of the payroll tax cut!

    December 22, 2011 at 11:19 am | Report abuse |
    • Alison

      The "socialists in the White House" are trying to pass an extension. Your wonderful republicans are stalling it.

      December 22, 2011 at 11:27 am | Report abuse |
    • Matt

      Ah, but a year long extension means they need to figure out how to pay for it...and while most people with common sense would say it should come from wasteful gov spending somewhere, the Democrats' only answer for it is to raise taxes on the rich.

      December 22, 2011 at 11:39 am | Report abuse |
  10. Kevin

    I wouldn't notice at all. It's not so much what you make, but how much you spend. Like congress, the US is full of people who over spend. I'm far from rich, but could live off 2/3rds, or maybe even half my income. I wonder how many people complaining about the missing $20 have a flat screen TV, or a pack of smokes in their pocket?

    December 22, 2011 at 11:19 am | Report abuse |
    • Alison

      Having a flat screen TV doesn't mean you're rich. It means you've purchased a TV in the last 5 years. They don't make em like they used to! And also, not everyone having issues with this is an overspender. Some people make just enough to cover their bills and a $40 hit to the wallet could prevent them from paying one of those bills. It's not because they mismanage their funds. It's because life is expensive.

      December 22, 2011 at 11:35 am | Report abuse |
    • Kevin

      If you can't afford a $20 cut weekly, then maybe you shouldn't have bought that flat screen 5 years ago. I lived paycheck to paycheck when I was 16. By 18 I realized how much that sucked, and started saving. So many people simply don't understand budgeting.

      December 22, 2011 at 11:44 am | Report abuse |
  11. CACTUSJUICE

    40.00 is 6 packs of cigs and some lotto tickets

    December 22, 2011 at 11:21 am | Report abuse |
  12. BD

    $40 pays my gasfor one week of going to work or groceries for a two weeks. Were retired and live on a fixed income as many americans and It will really cut into our budget, from food, heat, and getting to work.

    December 22, 2011 at 11:22 am | Report abuse |
  13. Glades2

    To me it's a month of gasoline (at the current price) used going to and from work...

    December 22, 2011 at 11:26 am | Report abuse |
  14. Ruth from Ohio

    My, My ,My.....whine ,whine,whine.....wonder what my grandparents did without during the depression,whoa wait a minute.....A LOT......you would be amazed and I am sure spoiled people of today could do without if they really tried hard enough to do it like my Grandparents and my Parents did!

    December 22, 2011 at 11:29 am | Report abuse |
    • Matt

      Ruth, you make too much sense for people here. Everyone cites $40 being equal to something important...but you can probably do that with any amount. It's whether or not you are already spending $40 on something you don't need. You would be amazed at how much you can save on food if you pay attention to the tons of sales flyers supermarkets put out.

      Now, if $40 is really cutting into your essentials...then it is more imperative that a longer term solution is determined instead of the proposed bandaid....because in two months you're just in the same boat you're in now. Why not work on that now instead of kicking the can down the road? Oh, because it's a great political opportunity for one party to make the other party look bad. The Occupy movement fails because it does not correctly identify the fact that both parties are at fault for our government issues.

      December 22, 2011 at 11:48 am | Report abuse |
  15. CACTUSJUICE

    Why is this an 11th hour issue when they have had all year to rectify this along with many other issues, Obama politics.

    December 22, 2011 at 11:30 am | Report abuse |
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