Most of the tax debate that raged on Capitol Hill last week concerned the highly political question of whether to try to pass a tax-cut bill before the election -- as the Republicans, including presidential candidate Ronald Reagan and many Senate Democrats want -- or to postpone it until next year, as President Carter and most House Demorcats prefer.

The more serious disagreements about the nature and scope of possible personal and corporate tax cuts often were obscured by the political rhetoric over timing.

But the gap between the Republicans' sweeping tax-reduction proposal and the Carter administration's ideas -- it has offered no tax-cut plan yet -- is enormous.

There is a remarkable consensus that an increase in depreciation allowances is the best way to encourage business to step up their investmnet. It is all the more remarkable since some of the proposals, such as the Capital Cost Recovery Act, known as "10-5-3," would treat some industries far more generously than others and provide much less tax relief for small business than for large.

The provisions of tax law covering deprciation are among the most complex -- so complex in fact that many smaller companies shy away from some of them and do not claim as much depreciation as the law allows. As a result, the companies end up paying higher taxes than necessary.

Basically, depreciation is an expense. As a machine, a building or a truck gradually wears out or becomes obsolete before it is worn out, a company counts as an expense each year some part of the original cost of the asset.

But unlike most other expenses, depreciation is not a cost that must be paid in cash to someone. The company already had paid for the asset.Rather, the cash represented by depreciation is available to the company to use to replace the asset that is wearing out.

When inflation is high, however, depreciation based on the original cost of equipment bought years ago will not add up to enough actually to replace the asset when its useful life is over. For that reason, present depreciation rules cause most businesses to overstate their profits, and hence pay more taxes than they should.

This is what the various proposals to increase depreciation allowances are supposed to correct. Boosting these allowances is not quite the same as cutting business tax rates.

Suppose a business buys a machine that costs $100 and will last for five years. On its financial reports -- as opposed to its tax returns -- the company normally will use so-called straight-line depreciation, claiming a $20 expense in each of the years the machine will be in use.

Tax law already allows the business to accelerate its depreciation claims for tax purposes. For instance, if the company accepts the Treasury Department's estimate of the useful life of a particular type of equipment or structure, it can reduce that estimate by up to 20 percent. If five years is the useful life, under this procedure, the company could write it off in four.

In addition, whatever the useful life (except for some structures), depreciation can be calculated under several techniques, such as the sum-of-the-years-digits or double-declining-balance methods, that allow more to be claimed i the early years and less later.

The "10-5-3" legislation would break completely the link between an asset's useful life and the period over which it is depeciated. Structures would be written off in 10 years, equipment in five years and cars and trucks in three. And within those periods, depreciation still would be accelerated.

But there is a catch. Depreciation claimed in one year cannot be taken again later. Therefore, accelerating depreciation reduces a company's taxes in the early years of an asset's life but, in turn, increases them in later years.

Nevertheless, the privilege of paying taxes some time in the future rather than now is certainly valuable. It is as if the business was getting an interest-free loan from the government.

Just how valuable of course, depends in part on how much tax a company otherwise would owe. If a firm owes on taxes, faster depreciation would be of no immediate value to it.

Similarly, a smaller business with taxable income of less than $25,000 pays a corporate income tax at only a 17 percent rate. Between $25,000 and $50,000, the rate is 20 percent, and so on. Only when income passes $100,000 do corporations pay at the top 46 percent rate. Therefore, the amount of taxes postponed through faster depreciation would be less for smaller businesses with lower profits than for bigger businesses with higher total profits.

This differential impact according to the size of a business would occur whatever method was used to speed up depreciation. The "10-5-3" bill, however, also would affect different industries in different ways. Some industries in different ways. Some industries, such as public utilities, have equipment that lasts more than 20 years. Under "10-5-3," such equipment could be written off over only five years, with 76 percent of the cost recovered in only three years.

At the other end of the scale are construction and trucking and -- in the short-run -- even the automobile comapnies. Under present law, construction already can write off its equipment in 5.1 years and the auto-makers in 5.8 years.

Therefore, the reduction in an industry's taxes as a percentage of its investment will vary enormously from one to another.

The Carter administration is working on a depreciation proposal involving a reduction in the number of separate groupings of equipment for purposes of establishing useful lives and in some fashion accelerating the allowances without favoring the use of long-lived assets by industries. Instead of the $57 billion calculated for "10-5-3," the administration's proposal would cost about $25 billion in 1983, sources said.

One of the most dramatic changes "10-5-3" would make would be to shorten the useful life of structures frm an average of 32.6 years compared with the 10 under "10-5-3."

Opponents of "10-5-3" question whether this change would do much to improve productivity of the nation's industries, especially since it would apply to commercial structures such as office buildings and shopping centers, not just industrial plants. Moreover, opponents say the rapid write-offs would make real estate a huge new shelter for investors' other income.