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. Tom Hink

    What tax cut? There is no tax cut! The payroll tax collection has simply been waived, not eliminated, or canceled through legislative action. The authority to levy pay roll taxes is still there, and will be re-invoked when the political climate is ripe.
    So, all of you out there who have drunk the cool-aid, keep on being fooled!

    December 22, 2011 at 12:29 pm | Report abuse |
  2. 1984

    people dont understand the Republicans only want to extend it a year if the pipeline stuff is amended to the bill. So they are not compromising for the American people. They will only compromise if there OIL buddies get the pipeline deal. So please read the fine print. Boehner and Cantor are not in this for the American people, 40 dollars is 40 dollars whether its for a couple of months or forever its still saving me 40 dollars. Why dont they give up some of their money and perks.

    December 22, 2011 at 12:29 pm | Report abuse |
    • skarphace

      Exactly. The Keystone Pipeline project is a horrible idea and should not be pushed through by amending it to any other plan. It should stand or die on it's own.

      December 22, 2011 at 12:35 pm | Report abuse |
    • Voice of Reason

      Ironically though, the jobs the Keystone pipeline would create would probably offset the payroll tax cut. Wow, democrats really are dumb. And for all of you fools out there who say that us republicans are against tax hikes, I say, don't cut the tax AT ALL. Social Security will still have to be covered, and saving $40 a check now puts the whole program at risk. This is a tax cut that should never happened at all.

      December 22, 2011 at 12:39 pm | Report abuse |
  3. Txtwisterz

    This is Obama playing politics. If this passes for 2 months, it is a joke. We will just be going thru this whole ordeal again! Obama should have and could have passed this extension for a year but he IS THE ONE who chose not too. CALL ALL THE SENATE BACK from their caribbean vacations to pass an extension for 1 full year. And ps, make Michelle Obama bring her brats back from her Hawaiian Holiday, that yes, we the taxpayers are paying for. Why can't she stay in the White House for 1 stinkin holiday?! I thought she wanted to be there!

    December 22, 2011 at 12:31 pm | Report abuse |
    • skarphace

      To be honest, just about everyone is playing politics with this matter, not just Obama.

      December 22, 2011 at 12:35 pm | Report abuse |
    • AL

      Unfortunately you are clueless as to how this situation arose. The Senate has already passed the bill it is the House of Representatives and the Tea Party zealots that need to come back from vacation. What does Mrs. Obama have to do with all this? The President did stay behind and is spending the holidays away from his family to help get the bill pass for people like you and me. You called the Presidents daughters brats, your inner bigotry is showing loud and clear.

      December 22, 2011 at 12:56 pm | Report abuse |
  4. Sammy

    Perhaps the lawmakers should review the way that they conduct business. We have the lobbyist, we have the special interest groups, we have closed door sessions (where private deals are made) and we have the funds to "donate" to overseas countries that not only hate the United States but dispise us. We're giving our hard earned dollars to countries such as Pakistan that harbored Bin Laden and yet we're asked to have our taxes increased by an additional $40 biweekly? Are there any politicians that will stand up for what's right for America and not have loyalties to foreign nations? Instead of the working class forfeiting $40 each pay period how about the politicians forfeiting some of their steak, lobster and cavier dinners?

    December 22, 2011 at 12:33 pm | Report abuse |
    • Powerlifter165

      I agree no steak, lobster or 4 million dollar vacations to Hawaii and a 10% pay cut for all Federal elected officals

      December 22, 2011 at 12:44 pm | Report abuse |
  5. asdf

    .

    December 22, 2011 at 12:36 pm | Report abuse |
  6. Phil

    Funny, Obama calling this a "tax increase" if it doesnt pass, but anything that Obama and the Demos pose is never a "tax increase"

    December 22, 2011 at 12:37 pm | Report abuse |
    • Vic of New York

      The reason this is such a RED HERRING being thrown up by "Bone-head" and the Republicans is that the two months now forces them to negotiate on the rest of the year later. What those gullable morons on Right don't know (or maybe they do) – is that if you don't take the 2-months now, that gives Republicans the ability to drag this out all next year or try two switch the blame to the Democrats. Either way America gets screwed by the GREEDY, Wealthy, Dirty, Right-Wing Power Masters and their Zombie stooges in the ranks.

      December 22, 2011 at 12:47 pm | Report abuse |
  7. Jeff

    In a way I agree with you skarphace, when you talk about Social Security funding, but the issue here is that the government shouldn't have made the small cut when it did. Lower and Middle wage income earners had built that extra $80.00 a month into their budget, and now the government wants to take it back and cause this issue, which only impacts lower and middle class wage earners. We need to remember, this is our own money that the government is giving back to us and now taking away. It's not the government GIVING us something it's our wages being returned to us.

    December 22, 2011 at 12:38 pm | Report abuse |
  8. cigaretecartonMan

    $40 could buy 8 packs of Faro cigaretes, or a fake green card from Jesus Hernandes, or a counterfeit ipod made in China.

    December 22, 2011 at 12:39 pm | Report abuse |
  9. Jim

    The question shouldn't be what would $40 per paycheck mean to you, but instead what would a 2% pay cut mean to you (up to the withholding limit). A lot of responders sound like they aren't working at all or are making a lot less than $50,000 per year, which means the tax savings of a 2% cut would be a lot less than $40 per paycheck. A student making $10,000 per year, for example, will only be losing $7.70 per paycheck. I think a 2-month policy is irresponsible, will impose a lot of administrative burden on businesses, and should not be pursued. We should have at least a 1-year tax holiday, or better yet none at all. The U.S. is hugely in debt. Why are we borrowing to benefit people for 2 months when we will then be paying off the cost of that program over 10 years? This is the type of stuff that got us into this problem in the first place!!!

    December 22, 2011 at 12:39 pm | Report abuse |
  10. K

    Will $40-50 bi-weekly be the end of the world in my household? Fortunately not....but I understand it's a lot of money to a lot of people. I am less frustrated and angry about the amount, more frustrated and angry the gov. is going after the middle class, who's already being bled dry. Instead of taking $80 a month from hard-working folks struggling to make ends meet, how about raising taxes on the very rich?How about a slight raise in the taxes of those who make, say, $250k+ a year instead? It would not impact their quality of lives significantly while allowing those of us in the middle class to keep fighting to move forward in our personal finances. While the amount will not impact us significantly (this amount will not keep us from meeting our basic needs), I understand this amount will push some households over the edge financially. How about the gov. look to the rich instead of the struggling-to-not-be-poor?

    December 22, 2011 at 12:41 pm | Report abuse |
  11. Cweig

    When they cut the social security tax rate the first thing I thought was how are they going to fund social security if they cut it by a third. They argue about a lock box, but those of us with any knowledge on the subject realize there is no lock box, they just shift money around, print more, and drive down the purchasing power of our dollar even further. Now we are arguing about raising taxes on the middle class by not continuing the tax reduction. What did they think people would do / expect when suddenly a year later, they were paying 2% more in taxes. Either it was a ploy on the part of the adminastration to make it look like Republicans wanted to raise taxes just before Christmas leading up to an election year, or no one really considered that people really do want to keep more of their money and feel that what we send to Washington is wasted in spending that has nothing to do with the everyday lives of Americans.

    If they want to solve this dilemma, they should move the 2% out of the actual tax rate creating a real tax reduction for those in the middle class (what ever finantial definition that may pertain to) and put the money back into social security that was formerly budgeted under income taxes. Yes they would just be moving the money from one form of tax funding to another, but on the surface it does what it should do. It funds social security at a rate which is considered the norm, and it gives the middle class a tax cut. If the Rupublicans and the Democrats find a way to argue about that, then the lack of true concern and desire to play politics becomes that much more transparent and we can kick all the bums out of office that should be sent home.

    What does $40.00 mean to me – 2 weeks of trips too and from my office. Cheap night out to dinner for my family of four. Almost 6 salads for lunch from my favorite sandwhich shop (I should make them at home, but theirs are better than mine and nothing goes to waste in my refrigerator). I can take my family to the movies during primetime, but can't buy popcorn or drinks (I have not done that in well over a year).

    December 22, 2011 at 12:42 pm | Report abuse |
  12. Steve

    I agree with most of the postings. $40.00 is not significant, especially with all the additional costs to cover all the misguided programs the government keeps implementing. The government needs to pay down debt and ask themselves, "Why do we need prop up people that are supposed to be producing and self sufficient"? Could it be the government is ALREADY OVER TAXING AND WASTING FUNDS?

    December 22, 2011 at 12:43 pm | Report abuse |
  13. Voice of Reason

    Reading all of these posts, I just realized something: Democrats = Wimpy from Popeye.
    Wimpy says – I'll gladly pay you Tuesday for a hamburger today
    Democrats say – I'll gladly promise you a program tomorrow for a vote today
    The resemblance is uncanny.

    December 22, 2011 at 12:43 pm | Report abuse |
  14. Vic of New York

    The reason this is such a RED HERRING being thrown up by "Bone-head" and the Republicans is that the two months now forces them to negotiate on the rest of the year later. What those gullable morons on Right don't know (or maybe they do) – is that if you don't take the 2-months now, that gives Republicans the ability to drag this out all next year or try two switch the blame to the Democrats. Either way America gets screwed by the GREEDY, Wealthy, Dirty, Right-Wing Power Masters and their Zombie stooges in the ranks.

    December 22, 2011 at 12:43 pm | Report abuse |
  15. joseph

    means $80 out of my paycheck a month.

    December 22, 2011 at 12:47 pm | Report abuse |
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