It was just three weeks ago that Senate leaders released their proposal to begin serious reform of the state's tax code while raising $500 million to help balance the budget. The plan focused on broadening the base of the sales and income taxes, lowering the overall rates and ending many tax credits and special treatment for specific groups of corporate taxpayers.

Senate Finance Committee Co-Chair David Hoyle was intimately involved in creating the package and defending it before his fellow lawmakers and the public.

The plan is far from perfect but does begin the long overdue move to make the sales tax less regressive by applying it to more services and to clean up the corporate code by getting rid of some of the breaks for specific industries.

But that was all three weeks ago. Hoyle unveiled a proposal in the Senate Finance Committee Wednesday to give a break to a handful of multistate corporations in the state by changing the way their tax liability is calculated.

The full Senate passed it Thursday morning by a 40-7 vote.

The Insider reported that the tax change was requested by Governor Beverly Perdue, probably to help efforts to convince Apple Computer to build a facility in North Carolina.

Multistate corporations currently pay state taxes based on the percentage of property, payroll and sales in each state, though its common practice for corporations to shift profits to states with no corporate tax.

Roughly half the states require corporations to use combined reporting when calculating their taxes, making it harder to shield profits. North Carolina is unfortunately not one of them, despite a recommendation from a study committee and pleas from advocates for tax fairness.

Hoyle's latest bill would make things even worse, by allowing "capital intensive" corporations to use only their sales when figuring out what they owe the state.

The Apple Computer facility rumored to be the focus of the legislation is expected to invest heavily in equipment. The Insider compared it to the Google server farm in Caldwell County. 

A study a few years ago by the Center on Budget and Policy Priorities cited a large body of research showing that the proposed tax change is not an effective economic development tool and could actually encourage some multistate corporations to reduce their presence in the state.

It could give other companies already here a tax cut, even as they layoff workers. And it increases the unfairness of the state code for small businesses that lawmakers claim so often to support.

The Center study also found that states with the proposed change in corporate tax law have not enjoyed the success its supporters predicted and many saw economic development suffer.

No one can deny that Hoyle's legislation treats businesses differently, exactly the opposite of the philosophy behind the Senate tax package that was finally starting to turn tax policy in the right direction.

Hoyle says the change will only cost the state $1.5 million. Even if that's true, that would pay for afterschool programs for a lot of troubled kids.

And it's not just the money. It's exactly the wrong message to send about North Carolina's revenue system, that's it open to more breaks and more exemptions for more businesses, making the tax code more complicated and more unfair.

Hoyle and Senate leaders surely realize how wrong that is, to give special treatment to one group of taxpayers.  It's exactly what they were telling us just a few weeks ago.