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. MLCP

    According to a 2011 eHow Money article, "Married taxpayers whose total household incomes are $17,000 or less fall into the lowest tax bracket, which currently stands at 10 percent. " So a loss of $40 per month to these people means a 3.14% decrease in income monthly. I didn't see Washington taking an equivalent 3.14% reduction in their pay, benefits, or retirement funds.

    December 21, 2011 at 2:40 pm | Report abuse |
    • Johnny

      People who make that little aren't putting in $40 more a month to Social Security if these cuts expire. It is a percentage based. Understand what is going on before you comment.

      December 21, 2011 at 2:44 pm | Report abuse |
    • MLCP

      It is clear that those who don't think that $40 is important don't care very much for those that do. It is amazing to me that our society continues to focus on the survival of the fittest only. Apparantly this very religious country keeps forgetting the quote 'there but for the grace of God go I".

      December 21, 2011 at 2:47 pm | Report abuse |
    • bill

      MLCP. It's 2% of income. It's social security. Everyone pays the same percentage of 4.2% during the tax reduction year or 6.2% during any other year. Their employer also pays 6.2% which gives the total of 12.4%.

      December 21, 2011 at 2:52 pm | Report abuse |
    • Johnny

      I think it is because a few months ago these same people disputing this now were yelling for taxes to be raised on the wealthy ONLY as part of the agreement to raise the debt ceiling. You expect someone to be sympathetic for you when it didn't work the other way around? Not going to happen.

      December 21, 2011 at 2:53 pm | Report abuse |
    • rcb

      its not $40 for each person – that is just an average. think 2% of your income. so if you make $50,000 / year, it $1000 / year or $38 / check savings if paid every other week. this is capped at $106,000 income (or $2120 / yr savings). on the other end of the spectrum, if you make minimum wage, your savings it $295 / year or $11 / check.... might be bear money.

      December 21, 2011 at 3:00 pm | Report abuse |
    • rcb

      your math is off as well – (40*12) / 17000 = 2.82%, not 3.14

      December 21, 2011 at 3:05 pm | Report abuse |
  2. Saboth

    Yes, $40 is a significant amount to me. That's half a week of groceries for the household. Or a water bill. It's not chump change.

    December 21, 2011 at 2:40 pm | Report abuse |
  3. CassieM

    As a single person, $40 is two WEEKS worth of groceries for me. But hey, maybe now I can qualify for food stamps. Thanks for making a lot more people reliant on government hand-outs when we really don't want to be.

    December 21, 2011 at 2:41 pm | Report abuse |
  4. Stuart

    Not enough to fill up my Camery gas tank, and my Camery has a very good milage.... so you know.
    $40.00 is nothing

    December 21, 2011 at 2:42 pm | Report abuse |
    • Working Poor

      Anyone who says that $40 won't affect them, can just butt out of the conversation. If it does not affect you then no one cares what you have to say. It affects a lot of people. I'm included. So if you are someone who doesn't have to pay for medications, or care for someone else, or drive 28 miles back and forth to work everyday, then just keep your mouth shut because you obviously know NOTHING about struggle.

      December 21, 2011 at 2:49 pm | Report abuse |
    • Rich G

      $40 may not matter to him, but what the government does with that money probably will. He has just as much right to be a part of this conversation as you.

      December 21, 2011 at 2:58 pm | Report abuse |
  5. stevel

    OK EVERYONE...time to realize this lower of Soc. Sec. will have ripples down the line.....we should not be adding to the problem we will face down the road. Obama and Repub's...stop the maddness let it revert back. Now focus on the important things....cut spendig and get the budget balanced....CUT SERVICES, CUT UNEMPLOYMENT, CUT , CUT, CUT.......

    December 21, 2011 at 2:43 pm | Report abuse |
    • Jenn

      Ok so in a functioning government yeah go ahead and work it all out. Raise taxes back to where they were. They were in place for reason. Balance the budget, cut spending sounds like a solid plan. In this government, where no one is going to play ball with the other side and they all play the blame game. In this government, keep my taxes low because they aren't doing anything productive with it.

      December 21, 2011 at 3:01 pm | Report abuse |
  6. Softail

    Yea. its a big deal..losing it means one less tank a month of gas to get to work to earn that $40 less paycheck...goodstuff...when you day comes and it will come...remember what you posted here...

    December 21, 2011 at 2:44 pm | Report abuse |
  7. SaltyDog7

    Is this really a tax cut or is it robbing the Social Security fund again? How many more years will be lost from SS by reducing the collections now. It was already in serious trouble and this will only shorten the amout of time SS has to be solvent. The only reason for the 2 month Senate plan is so the President doesn't have to agree to the Pipeline that is part of the bill passed in the house.

    December 21, 2011 at 2:44 pm | Report abuse |
  8. FrustratedDude

    This is really frustrating me. Hell, I'm not all that happy with the way things are going in government, but this kind of BS article is not going to help anything. If the $40 is so important that no one here crying on this board will live without it, then why don't we all start crying for them to cut it an additional $40 per pay period from our taxes? Hell, make it $100. Then maybe those without internet, cable, newer model cars ,etc. can start to enjoy those things like the people on this board who are complaining about what they might have to cut... Oh, and we want better streets and national security and government run health care for everyone for free! Just sprinkle some magic Christmas dust on the treasury and we'll be fine.

    My wife and I just got done paying off the debt we fell into during the worst of the recession (the worst we've seen, at least), and we'd love to see an extra grand in our bank accounts at the end of the year. That being said, we also realize that this nation is at a scary point where everyone is used to suckling the teat of the benefits provided by this great nation, but few are willing to reach into their pockets to cover the expense.

    We need a no nonsense leader to stand up and say that yes, this nation has a spending problem. Yes, there are some things broken in the country. Yes, there is a disparity between the rich and the poor. Yes, the tax code is an absolute mess (something both the rich and the poor can tell you). More important than all of this, though, we are still in the United States of America, something I'm personally still very proud of. This nation can be put back on a good path but it's going to take some uncomfortable times for some (maybe more than $40 a paycheck for many). We need to get ready to pull up our bootstraps and deal with the consequences of things being in the state they are in.

    Before we can make any forward progress, we need an awakening in the government. We need to require all of the politicians to take a basic economics course. We need to get all of the lobbyists and union leaders out of their seats of power and doing some work that helps the problems this nation is facing, not exacerbates them. We need to correct social security (increase the minimum collection age and make it OPTIONAL).

    Now, instead of all the crying, someone tell me where to start......

    December 21, 2011 at 2:45 pm | Report abuse |
    • mary

      In the end of all your "rant" you say we need a leader than will stand up to this..
      Well.. In America we don't have a "king" a dictator that can undo what we have set up to protect us from that..
      It is Congress that is supposed to do that.. And right now, the Republicans in congress have found a way around that.. By banding together against the american people..
      It is the last election that gave them the power.. Those that voted them in, put the fox on guard at the chicken house.. And unfortunately Obama can't just raise his hand and shove his will down on anyone.. Even if it is what the people need..
      He is president, Not the KIng..~!

      December 21, 2011 at 2:53 pm | Report abuse |
    • FinanciallySound

      I wish Mitch Daniels would run for President, even though he couldn't get elected because of the hatred Indiana citizens have for him. But, he has balanced our state's checkbook during his time as governor. We aren't in debt like California and other states, or like our nation as a whole. Did he make hard cuts? Yes. But, when the govt's spending is out of control as ours has been, that's going to be the inevitable result. Spend less than you make. That's the only way to balance the budget and control debt, whether we're talking about an individual, a family, a state or a country. Period.

      December 21, 2011 at 3:39 pm | Report abuse |
  9. Johnny

    My paycheck stands to go down around $100 when this goes through. To me, that is a night out at a bar. I don't want to have to go to the bar two less times per month.

    December 21, 2011 at 2:46 pm | Report abuse |
    • mary

      Yet to many many Americans it amounts to the gas they use to drive to work..Or food they use to make their lunches..Or worse the money they use for their children.
      You know, like food, shoes, medicine..
      You sound young and single.. Great>> Try asking some one trying to take care of a family what a 100.00 a week means..
      Two different lifestyles and needs..

      December 21, 2011 at 2:57 pm | Report abuse |
  10. Aubrey

    Why are you lying CNN? 80/month is the max. Poor people don't pay anything near that.

    December 21, 2011 at 2:46 pm | Report abuse |
    • Johnny

      They are lying, but so are you. This is a 2% increase on wages up to $110,100. So for everyone that makes that much or more, their take home pay will go down $2,220 per year, or $183.50 per month. People making $20,000 a year will lose $400 over the year, or $33.33 per month.

      December 21, 2011 at 2:50 pm | Report abuse |
  11. George

    What a lot of you are missing is that this money is coming out of what you will draw on retirement from Social Security.
    The less you pay now the less you get later

    December 21, 2011 at 2:46 pm | Report abuse |
    • Working Poor

      You're crazy if you think there will be any Social Security around when it's time for the younger generations to retire. So what are we paying for? I'm 28. I know I won't have the government to rely on paying me, I'll be working until I die. So I want to keep my "lousy" $40 a month.

      December 21, 2011 at 2:51 pm | Report abuse |
    • George

      WP. If the Dem's from LBJ to now had kept their hands out of the cookie jar you would be able to. They saw it as a way of buying votes so started raiding it.

      December 21, 2011 at 3:18 pm | Report abuse |
    • Mike

      umm.. check your facts.. its NOT going to affect Social Security. This $40/month short term benefit as proposed has a $17/month mortgage payment increase for the next 10 years. I'm with "Working Poor" though. I'm 32 and no politicians are even talking about helping out my generation. We're just the generation that gets stuck with the bill, and lower wages, and less benefits(if any such as 75% of Social Security benefit). So, tell me again why we're forced to pay benefits we won't fully receive?

      Oh yeah, did I even mention our generation is already straddled with the student loan debt that now EXCEEDS credit card debt for the first time? You guys must think that money for the next generation grows on trees. My ex is straddled with paying about 50% of her paycheck on student loans. That legislation that maxed the percentage of a paycheck towards student loan debt is a joke. She called to inquire about it and it is per loan!

      December 21, 2011 at 3:40 pm | Report abuse |
  12. Andrea

    What do the House Republicans care if people are going to be out $40 a paycheck. It means nothing to do. This is why their approval rating is so low. Well be out even $10 a paycheck is going to mean maybe one day nothing buying lunch or spending when I go grocery shopping. So now they have gone off of their break and bascially said "so what" if people are going to be losing money. We have ours

    December 21, 2011 at 2:48 pm | Report abuse |
  13. charlie

    $40 bucks is about 40% of my bank account right now, so yeah, it's a big deal.

    December 21, 2011 at 2:50 pm | Report abuse |
  14. Jack4872

    Time to stop giving food to the pets, and to turn the pets into food.

    December 21, 2011 at 2:50 pm | Report abuse |
    • mary

      Survival of the fitterst? Survival of the higher species, survival of the most important of that species..
      Don't you get it?
      If you start thinking a pet needs to be used for food.. When will smaller weaker humans be used as resources?
      Well, the rich are doing just that to poor people right now..
      they view the poor as parasites.. So just think about what you said.. It is a prelude to the future..
      If you would eat a beloved pet. or advocate it.. Your taking your first step into the dark world of survival of the fittest buddy..

      December 21, 2011 at 3:01 pm | Report abuse |
  15. kathy price

    $40.00 is the cost of school lunch for my 11yr old son. This 40.00 is only affecting the people who currently HAVE JOBS and don't receive FREE LUNCHES for their children. How many parents will now have to apply for the Free Lunch program? Isn't that a goverment program?

    December 21, 2011 at 2:51 pm | Report abuse |
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