House Democrats unveiled plans for the most comprehensive US health-care expansion in four decades that will require the wealthiest Americans shoulder the bulk of the financial burden for health care reforms. The plan seeks to raise $544 billion over 10 years by increasing taxes on the wealthiest Americans and imposing a surtax of 5.4 per cent on couples with income in excess of $1 million.

The legislation proposed on Monday would impose additional taxes on households with more than $350,000 a year in income and calls for further increases if the measure does not net the targeted savings.

House leaders said the plan includes mandates to purchase coverage and a public health-insurance option covering 97 per cent Americans by 2019. The legislators' work was praised by president Barack Obama who said the government would begin the process of fixing what was broken in the system.

Healthcare reform has been a top priority with the Obama administration and a major plank of the Democratic party in last year's elections. The president called on both chambers to vote on their versions of the legislation ahead of the August recess.

The 1,018-page House Democrat plan builds on a draft presented on 19 June and for the first time spells out how the plan would be funded. In addition to the levy on millionaire households, the House would also levy surtax of 1.5 per cent on couples with incomes of $500,000 to $1 million and 1 per cent on those with incomes exceeding $350,000.

The estimated savings from the health-care overhaul would be subjected to a review by the White House budget office and in case the savings are $150 billion more than expected, a planned second set of increases for those with income between $350,000 and $1 million would be scrapped. If the savings cross $175 billion, the surcharge for those incomes would be fully withdrawn.

The surtax would identify wealthy American on the basis of adjusted gross income, meaning it would also apply to capital gains and dividends currently taxed at a 15 per cent rate. According to House Ways and Means Committee chairman Charles Rangel, lawmakers targeted high earners as it caused the least amount of pain to the least number of people.

The plan was slammed by the US Chamber of Commerce, the biggest business lobby in the US. In a statement attributed to the Washington-based group's president Thomas Donohue, it said the plan intended to tax high-income families but would hit America's small business owners.

The legislation would raise taxes on larger corporations and among other things would make it easier for the Internal Revenue Service to proceed against tax shelters and deny cross-border deductions that some companies claim through tax treaties.

The House is also proposing penal provisions for Americans above a certain income level - people would be penalised as much as 2.5 per cent of their income for failure to buy health insurance and most employers would be required to insure their employees or pay a penalty of about 8 per cent of their payroll.

The plan has also drawn flak from Senator Ben Nelson of Nebraska who said he has not seen much support for taxing wealthy Americans in his state because people are looking someday to become millionaires themselves. He said it was the American way.

Republicans have also voiced their misgivings and Michael Steele, chairman of the Republican National Committee said the Democrats' priorities were now clear - a government-run system financed by American citizens and small businesses with higher taxes.