ARI SHAPIRO, HOST:
In New York, the so-called millionaires tax is set to expire at the end of this year. The state is struggling to balance its books, and a poll out this week shows that New Yorkers favor extending the tax by more than 2 to 1. But as NPR's Joel Rose reports, some powerful New Yorkers oppose extending the tax, including the state's popular governor.
JOEL ROSE, BYLINE: The New York City's transit workers union held rally this week outside City Hall in Manhattan. In a video clip posted on the union's website, President John Samuelsen called on lawmakers to extend the millionaires tax.
JOHN SAMUELSEN: The wealthiest people in New York State are going to get a nice take-home pay raise on January 1, while working families continue to struggle. It's not the wealthiest New Yorkers that need monetary relief. It's working families.
ROSE: The tax in question actually applies to individuals who make more than $200,000 a year, or $300,000 a year for families. When it was enacted in 2009, the tax was supposed to be temporary. But there are many in New York who would like to see it extended.
RON DEUTSCH: We have such great need in New York. And we also have the greatest income disparity of any state in the nation.
ROSE: Ron Deutsch directs New Yorkers for Fiscal Fairness. He's been arguing for years that the state needs to shift more of its tax burden to the top wage earners. He credits Occupy Wall Street protesters with giving the issue more visibility.
SAMUELSEN: They're concerned about income inequality. They're concerned about the tax code and how it favors the wealthiest among us. The Occupy movement has really created space for dialogue that we haven't had for far too long.
ROSE: New York is facing a projected budget deficit of more than $2 billion next year, and recent polls show that an overwhelming majority of New Yorkers support extending the millionaires tax rather than cutting services. But Governor Andrew Cuomo, who has some pretty enviable poll numbers himself, does not seem impressed. At a news conference last week, the governor said the tax is bad for business because it encourages some of the state's most affluent citizens to leave.
GOVERNOR ANDREW CUOMO: The competitiveness of this state is hurt when you are one of the highest tax states in the nation, and businesses and people are more mobile than ever before. I also believe that point is all but inarguable.
ROSE: The majority of New York's wealth is concentrated in and around New York City, where Connecticut and New Jersey are both within relatively easy commuting distance. But there's some debate about whether taxes are really driving anyone out of New York.
CHARLES VARNER: There's just really no evidence that people are very responsive to small changes in tax rates at the state level.
ROSE: Charles Varner is a sociologist at Princeton University. He studied the effect of a similar tax on the top one percent of wage earners in New Jersey. Varner found that people consider a lot more than just taxes when they decide to move.
VARNER: Where do you want to live? Where is the weather nice? Where does my family live? Where do my friends live? Those are just much more important to people in deciding this. Tax rates are just way, way down the list.
ROSE: Still, opponents of the millionaires tax say Governor Cuomo's argument does have merit. Dan DiSalvo is a senior fellow at the Manhattan Institute, a conservative think tank. He says New York is already one of the most-taxed states in the nation.
DAN DISALVO: For Governor Cuomo to make New York competitive and attractive to businesses across the county, he's got to compete with other states, and raising taxes on wealthy individuals is not the kind of signal to send to people who want to come and open a business and make a lot of money.
ROSE: And, of course, there's the political calculus for Governor Cuomo to consider. The first-term governor campaigned last year on a promise not to raise taxes. And he seems determined to keep that promise no matter what the polls say. Joel Rose, NPR News.