ALBANY – In reviving a plan to change the state’s corporate tax rules, Governor Pataki is hoping to get it passed this time by folding it into a new economic incentive program and limiting its scope.

Last year, Mr. Pataki proposed to end for manufacturers the traditional formula for taxing businesses, which takes into account sales, payroll, and property. The governor suggested instead that manufacturers be taxed only on their New York sales.

That proposal – which would have lowered taxes for companies that have a large number of employees and substantial property and raised them for companies that don’t – never made it though budget negotiations despite strong support in the Senate.

This year, the governor is again calling for a switch to the so-called single sales factor.

He is proposing to apply it to manufacturers that make a significant investment in economically depressed areas upstate, which would be identified by the Empire State Development Corporation.

According to the governor’s budget, businesses that invest at least $25 million in these areas would pay taxes on in-state sales rather than following the existing formula. The reasoning behind the move is to encourage capital investment and job creation by promising not to tax either one.

Whether the proposal will pass the Legislature this year is not certain. A spokesman for Senate Majority Leader Joe Bruno said it has the support of Senate Republicans like Mr. Bruno but that Assembly Democrats could block it again.

Unlike last year, however, Mr. Pataki is thought to have an upper hand in negotiations because of a Court of Appeals ruling in December that affirmed his power to construct a budget that cannot be altered by legislators – except for their power to strike or reduce individual budget items they find undesirable.

In the case of the single sales factor, that restriction could prove politically risky. Because Mr. Pataki has folded the proposal into an economic incentive program, lawmakers will be forced to choose neither or both.

Opponents of the single sales factor argue that it unfairly displaces the tax burden from corporations to individual taxpayers. Trudi Renwick, an economist with the Fiscal Policy Institute, a labor-backed research organization in Albany, said the proposal would also not increase the number of manufacturing jobs in the state.

“By moving to a single sales factor there would be winners and there would be losers,” Ms. Renwick said. “But there really is no reason to believe that it’s going to stimulate employment.”

Ms. Renwick pointed to Massachusetts, which adopted the tax formula 10 years ago under pressure from Raytheon Co., one of the state’s largest employers. She said that in 2000-03, the number of manufacturing jobs in Massachusetts declined 20%, compared to an 18% decline during the same period in New York.

Proponents of the change, including the Business Council of New York State, say it encourages capital investment and hiring at companies that already exist in the states that adopt it. Four years ago, the Albany-based Business Council published a study that said the change could result in 133,000 new jobs.

The group also said revenue from increased personal income and property taxes would more than offset reduced corporate property and payroll taxes. The Business Council identified the single sales factor as its top tax-related priority in 2001, the year the report was issued.

Prior to 1975, New York put equal weight on employment numbers, property, and sales to determine corporate taxes. In 1975, the state doubled the weight of sales in the tax equation. New York is one of 25 states that currently follow this formula.

States that follow the single sales factor for all businesses include Iowa, Missouri, Illinois, and Nebraska. States that have adopted it for manufacturers alone include Connecticut, Maryland, and Massachusetts.