Dems Consider Medicare Tax on Investment Income Expansion would pay for health-care reform By Kevin Spak, Newser Staff Posted Jan 14, 2010 8:56 AM CST 36 comments Comments Senate Majority Leader Harry Reid, left, and House Speaker Nancy Pelosi, speak outside the West Wing of the White House following a meeting between President Barack Obama, Oct. 6, 2009. (AP Photo/Pablo Martinez Monsivais) (Newser) – Democratic leaders have cooked up a potential new way of paying for the health care bill: applying the Medicare payroll tax to investment income. The idea would please labor leaders, who oppose the tax on so-called “Cadillac” insurance plans, bolster Medicare’s finances, and place the burden mainly on the affluent. But it might anger seniors, who rely on investment gains for much of their income. The idea comes after an intense negotiating session at the White House, in which Obama asked House and Senate leaders to surrender their BlackBerries and phones and stay in the room until they’d reached some consensus on the issues dividing them. They worked into the night, and Harry Reid emerged saying they were “encouraged and energized” by their progress.