Actually just adding margin-bottom: -20px; to the tag class fixed it right up.
Being block elements, div's naturally have defined borders that they try not to violate. To get them to layer for images, which have no content beside the image because they have no closing tag, you just have to force them to do what they do not want to do, like violate their natural boundaries.
.container {
border: 1px solid #DDDDDD;
width: 200px;
height: 200px;
}
.tag {
float: left;
position: relative;
left: 0px;
top: 0px;
background-color: green;
z-index: 1000;
margin-bottom: -20px;
}
Another toue to take would be to create div's using an image as the background, and then place content where ever you like.
<div id="imgContainer" style="
background-image: url("foo.jpg");
background-repeat: no-repeat;
background-size: cover;
-webkit-background-size: cover;
-mox-background-size: cover;
-o-background-size: cover;">
<div id="theTag">BLAH BLAH BLAH</div>
</div>