July 14 (Bloomberg) -- House Democrats plan to introduce health-care legislation today that increases taxes on the wealthiest Americans, including a 5.4 percent surtax on couples earning more than $1 million.

The surtax would also place a 1.5 percent tax on couples with incomes between $500,000 and $1 million, and a 1 percent surtax on incomes over $350,000. It calls for the taxes to increase if the overhaul doesn’t produce at least $150 billion in cost savings. Capital gains as well as earned income would be subject to the surtax.

President Barack Obama praised the bill, saying it will “begin the process of fixing what’s broken” in the health-care system.

“This proposal controls the skyrocketing cost of health care by rooting out waste and fraud and promoting quality and accountability,” Obama said in a statement. “Its savings of more than $500 billion over 10 years will strengthen Medicare and contribute to our goal of reforming health care in a fiscally responsible way.”

The plan, which includes a public insurance option and requires employers to insure employees or pay a penalty, may draw fire in the Senate. Eventually, the House and Senate have to craft a compromise, and conservative lawmakers in both chambers have balked at taxes outside the health-care system.

Millionaires’ Tax

Senator Ben Nelson, a Nebraska Democrat, said he’s “not hearing a lot” of support for a surtax on wealthy Americans. People in his state don’t like the so-called millionaire’s tax “because they are looking someday to get there themselves,” Nelson said. “It’s the American way.”

The legislation also would raise taxes on corporations to help pay for the health-care overall. Among other things, it would make it easier for the Internal Revenue Service to prosecute tax shelters, and deny certain cross-border deductions that some companies are able to claim through existing tax treaties.

Leaders in the effort to reduce health-care costs and expand coverage to the estimated 46 million uninsured Americans are encountering stumbling blocks on every level. Efforts to reach a bipartisan compromise in the Senate have so far failed. In the House, the Democrats’ plan is considered too costly by dozens of their own members.

Obama’s Deadline

Obama, who has set an August deadline for both chambers to pass their version of the health-care legislation, summoned top lawmakers to the White House yesterday to prod them to get the effort back on track.

When House leaders released the first draft last month, House Energy and Commerce Committee Chairman Henry Waxman said at the time that it would cover at least 95 percent of Americans.

Last week, the 40 members of the fiscally conservative Blue Dog Coalition wrote House leaders to complain that the legislation didn’t cut enough costs and might hurt hospitals and doctors. Yesterday, the New Democrat Coalition of centrist House Democrats said a proposal to create a public insurance plan that pays providers based on Medicare rates should be scrapped.

To contact the reporters on this story: Ryan Donmoyer in Washington at rdonmoyer@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

Last Updated: July 14, 2009 14:47 EDT