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.


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.



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.









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. skarphace

    For every cut, there is a cost. You cannot have a cut without one of three results: an increase in some other tax or fee to offset the cut, a decrease in spending, or an increase in the defecit and therefore the debt. For example, the result of the Bush tax cuts, which were not paid for and were not offset by spending cuts, was to add over 2 Trillion dollars to the debt.

    So what will the cost of the Payroll 'tax' cut be? It will be offset by fees and/or other taxes, it will be offset by Social Security spending, or the lost OASDI revenue will be borrowed and therefore increase our defecit and debt.

    To me, none of these costs are worth the money we save with this Payroll 'tax' cut. Therefore, it is a bad idea.

    December 22, 2011 at 3:16 pm | Report abuse |
  2. Nancy

    $40 means the difference between life and death for me. I have lupus and the main medication that keeps me alive has a $40 co-pay.

    December 22, 2011 at 3:16 pm | Report abuse |
    • skarphace

      From the very beginning, this cut was meant to be temporary. Therefore, you should not have added this savings into your required budget. Doing so was not very fiscally responsible.

      December 22, 2011 at 3:22 pm | Report abuse |
  3. ummyaa

    2012 baby! That forty bucks wont mean squat next dec...ya ya ya ya right!!!

    December 22, 2011 at 3:16 pm | Report abuse |
  4. Virginia Richters

    $40.00 is a tank of gas for driving to and from work each week. Add a additional $40.00 out of my paycheck and the cost of commuting doubles. $40.00 a week is $2080.00 a year. Temporary taxes don't remain temporary for long – too easy to extend the temporary tax or to make it permanent.

    It's "only" $40.00 now but what about next year and the year after that? No wonder the middle class is disappearing. We are headed for a country consisting of Haves and Have Nots.

    December 22, 2011 at 3:17 pm | Report abuse |
    • skarphace

      It is not $40 a week unless you make $100k a year and in that case $2k means little to you. It is $40 a biweekly paycheck if you make $50k a year and in that case $1k means little to you. See where I am going with this?

      December 22, 2011 at 3:23 pm | Report abuse |
  5. DAC

    $40 or not, I will not vote to re-elect anyone currently in Congress. Absolutely ridiculous.

    December 22, 2011 at 3:20 pm | Report abuse |
  6. Patrick

    Ok. Many times I have found myself in a position where $40 made a difference – but it was my own stupid choices that put me into those positions to begin with! If your life is so f^&ked up that $1.33/day makes that big of an impact, I've got a news flash for you – IT'S TOO LATE! Most of the people on this rotating ball of rock survive quite nicely on less than $1/day... hell, some of them right here in America! To the 'whiners' out there... live 2+ years in a Third World country, where $40 can feed a family of 10 for a month AND pay their mortgage, and then come back and complain about taxes being too high! Americans complain way too much about every little inconcevience that life throws at them – well life isn't fair and it never will be, no matter what fool is currently in the White House!

    December 22, 2011 at 3:21 pm | Report abuse |
    • skarphace

      You didn't have this cut in 2010 and this cut was meant to be temporary. Therefore, you should not have depended on this $40 for your regular budget.

      December 22, 2011 at 3:25 pm | Report abuse |
  7. Jo Miller

    $80.00 for two months does NOT equal $1,000. So, what is being planned next?

    December 22, 2011 at 3:22 pm | Report abuse |
  8. Bruce Matthews

    It's not just about $40.00 but also extending unemployment benefits and slashing medicare by 27 percent.

    December 22, 2011 at 3:23 pm | Report abuse |
  9. TheGuad

    Boehner & GOP need to go see a Dr. A Proctologist to be specific. They all have their heads stuck up their #$$@$. They all have a "CRAPPY" view of middle class. They need help to pull their heads out.

    December 22, 2011 at 3:23 pm | Report abuse |
  10. Clint

    $40 bucks is nothing. I am a Federal Employee. With the 2 yr pay freeze, I now make $5000 less per year. It isn't for 2 years, I will make $5,000 less per year for the remainder of my career... That is roughly $192 per paycheck, or $100,000 over my next 20 years. Would tax payers agree to contribute this much to get the US out of debt. Congress and the President lie about how this is a savings, but it is forcing middle income Government Employees pay for the bogus ARRA projects.

    December 22, 2011 at 3:23 pm | Report abuse |

      Hmmm, you must make pretty good money that we taxpayers are paying for if you would loose that much a paycheck. I have not had a raise in since 2008 so quit complaining. I work for a physicians office and I can assure you most physicians do not make the kind of money the media and goverment claim after overhead. Repeal the healthcare act and all the green giveaways and that would cover this pay deduction (NOT a tax cut since coming from Social Security)MERRY CHRISTMAS 🙂

      December 22, 2011 at 3:53 pm | Report abuse |
    • Lisa

      Welcome to the land of Privatization. We've been having pay freezes and pay cuts for a number of years now (at least in CA). I feel bad for you but I had to take a pay cut as well just to get a job - I'll lose $380k over the next 20 years as a result.

      December 22, 2011 at 4:05 pm | Report abuse |
  11. Pete Ochinski

    Isn't this 'tax break' coming from the Social Security system ? Isn't SS broke ? How on earth can we be talking about reducing the input to SS ? Oh that's right, we'll just print some more money, or borrow more from China. This is NOT a tax break ! This is another reuse of social security. Enough already !

    December 22, 2011 at 3:24 pm | Report abuse |
    • skarphace

      Well, it doesn't necessarily have to come out of Social Security revenue. However, if it doesn't, then it must be offset by other spending cuts, other tax increases and fees, or an increase in our defecit and debt.

      December 22, 2011 at 3:27 pm | Report abuse |
    • Richard

      It actually isn't. It will really be the general fund taking the hit – through some accounting magic – read up on it, I had been wondering about it for a while. Why they didn't make it a little simpler and just cut 2% from the bottom three brackets ($83.6K for single; $139.35K for married joint; $69.675K for married separate; $119.4K for HoH) or something of the sort is beyond me. It would really save a lot of wrong assumptions.

      December 22, 2011 at 3:38 pm | Report abuse |
    • skarphace

      Richard: if it is done the way you say, with 'creative accounting', then the result would be an increase in the deficit.

      December 22, 2011 at 3:55 pm | Report abuse |
  12. skarphace

    I think Americans are confused by the word 'temporary'. Look it up and you will realize that the savings from this cut should have never been used to increase your budget. If you made such a mistake, the time to rectify that mistake is now.

    December 22, 2011 at 3:29 pm | Report abuse |
  13. rodwick

    The hijacking of this Neocon Conservatives Republican party is obviously complete. I am humbled by the speed of the transition too the indefinable thing it has become. Many thanks for turning this WASP 1% er into the most despised citizen class in America. You've truly taken the A out of America and the U out of us. In return we would like to take the R out of Republican and maybe, just maybe we can be recognized as wealthy American Citizens instead of this Citizen of the world agenda the party currently pushes to help us shelter our assets and invest in Asia instead of America. The means obviously do not justify the ends of this financial equation. It is not a patriotic thing to sell out ones nation for your own personal gain and claim its justified by law.

    December 22, 2011 at 3:31 pm | Report abuse |
  14. stacell

    Could buy my kid at least one Christmas present.

    December 22, 2011 at 3:32 pm | Report abuse |
  15. Richard

    If a 2% cut expiring causes this much of a ruckus, what would happen if we were to end the Bush-era cuts? Or to go further, actually balance our budget (say an extra 1% for the bottom bracket, 2% for the second, 3% for the third, etc. – or 2%, 4%, 6% etc., whatever it would take).

    December 22, 2011 at 3:32 pm | Report abuse |
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