Did Matt Drudge actually make a tax penalty payment after not getting insured? (The Wire)
Conservative Internet pioneer Matt Drudge has built his career on scooping up salacious gossip and breaking news stories. But Drudge himself has become the focus of attention after announcing he paid a federal tax penalty after refusing to sign up for the Affordable Care Act.
On Friday, Drudge posted a message on Twitter to his 250,000 plus followers:
However, several left-leaning publications jumped on the claim, accusing Drudge of lying (or being misinformed) and arguing that the penalty is not in fact due until 2015.
The penalty for not getting health insurance, or a viable exception, aka the Individual Shared Responsibility Provision, states that an individual must have been uninsured for nine months out of the year. And technically, the deadline for getting insured does not even begin until after March 31.
The White House directly responded to Drudge’s claim on Twitter, with Director of Progressive Media and Online Response Jesse Lee writing:
Flat lie, no fee for previous year. Scary how much influence he once had. RT @DRUDGE: Just paid Obamacare penalty for not ‘getting covered’
Was Drudge lying or misinformed? Or, did he actually pay the penalty and is being unfairly criticized?
Conservative outlets including Breitbart and The Washington Times jumped to his defense, echoing a later claim from Drudge himself that he was actually paying a small business or self-employed tax as part of his quarterly 2014 estimated tax payments.
As with so many other tax laws, it turns out there might be varying degrees of truth for each argument.
The H&R Block Tax Institute told The Wire that Drudge is likely overpaying his tax debt now and that the overpayment will be deducted once the health insurance penalty is assessed early next year. However, H&R Block also said there is no formal payment calculation yet in place by the IRS for the Individual Shared Responsibility Provision. What’s more, when individuals make estimated tax payments, they cannot specify which government program their payments are going to, i.e. building roads, fighting wars or healthcare. So, if H&R Block is right, Drudge’s literal claim is probably not exactly true, either. At best, he’s overpaying his taxes and assuming that extra money will go to his eventual penalty for not getting health insurance.
So, how much of an advanced payment did Drudge make to the IRS? That depends on how much money he plans to make this year. Since he almost certainly falls above the minimum wage requirements, he’d owe 1 percent of his annual income. That amount doubles next year to 2 percent before capping at 2.5 percent in 2016.
For most Americans, a 1 percent or even 2.5 percent penalty is probably less than what they’d pay for health insurance. Of course, the penalty does not grant actual coverage. It’s just a penalty fee. But for wealthier individuals, the penalty is likely to outpace what it would cost to obtain a health plan that meets the government’s minimum requirements. For example, someone earning $1 million in income this year but choosing to not get covered would owe a $10,000 penalty. Though for political pundits like Drudge, the extra penalty cost might just be worth all the attention he’s getting over his payments – even if they’re technically not due just yet.