Dems Pursuing Another Tax to Appease Unions

House and Senate negotiators are considering applying for the first time the Medicare payroll tax to investment income as part of a compromise to pay for a health overhaul.

The extra Medicare tax would apply only to the wealthy and could allow congressional Democrats to reduce the sting of a tax on high-cost insurance plans, said Democratic aides and others briefed on the negotiations.

Labor leaders complained directly to President Barack Obama on Monday about the tax on high-value plans, which would hit some union members who have negotiated generous health benefits.

At least one union is threatening to oppose the underlying legislation if the tax remains, and the president of the AFL-CIO suggested in a speech that Democrats who took unions for granted risked losing support in congressional elections later this year.