With strong backing from the steel and auto industries, prominent members of Congress are sponsoring legislation that would allow corporations to trade in their unused investment tax credits for cash from the Treasury to finance capital investments.

The odds against the bill's enactment appear to be long, but just by introducing it the congressmen set off a new debate among economists and executives about the use of the tax laws to help ailing industries.

Supporters, led by LTV Corp. and a big-busines group known as the Basic Industries Coalition, say the bill would allow corporations access to funds that are rightfully theirs anyway and stimulate much-needed modernization in the factories. Opponents call it a raid on the Treasury and a misuse of the tax-credit system.

Present law allows corporations to offset 10 percent of capital investment cost against their tax liability. But this incentive to invest and modernize has not had its intended effect because many corporations in the nation's basic heavy industries have not been profitable, so they don't have any tax liability and therefore can't use the credits. LTV, for example, lost $7.2 million in the first quarter of this year.

The proposed the law would allow corporations to draw down 85 percent of the accumulated value of their credits in cash, to help defray the cost of new plant and equipment. The purchase would have to be made in advance of the drawdown, to ensure that only sound companies capable of raising funds in the private capital market, not those in danger of bankruptcy, would benefit.

The companies would have to repay 100 percent of the value of the credits by 1990, but the tax credits against future liabilities would then be restored to them.

Rep. James R. Jones (D-Okla.), chairman of the House Budget Committee and a member of the tax-writing Ways and Means Committee, said the bill he sponsored with Rep. Barber Conable (R-N.Y.) "can swiftly and decisively turn around the decline in our aging industrial sector" by freeing investment capital to which the companies cannot otherwise gain access.

Conable, ranking Republican on Ways and Means, said that in 1981 basic industries made $42.4 billion capital investment but were unable to use their investment tax credits or depreciation allowance to offset tax liabilities "because of declining profits. While they can carry over these tax benefits into future tax years, these benefits continually decline in value, and their non-utilization increased the cost of capital, thus rendering their products less competitive. Our proposal deals with part of this problem by giving them partial access, at a cost, to these tax benefits."

In the Senate, the measure is sponsored by by Sen. David Durenberger (R-Minn.), a member of the Finance Committee.

The opposition is led by the equipment-leasing industry, which says the bill is a disguised attempt to restore the right to sell unused tax credits for cash that was taken away from the industrial corporations by the 1982 tax act.

The American Association of Equipment Lessors--who get the tax benefits themselves if the industries lease equipment from them instead of buying it--said the proposed measure would create a "subsidy" that would "reward inefficiency and encourage investment that perhaps should not be made."

By requiring 100 percent repayment in five years, the association said, the bill "gives the illusion of repayment with interest, but anyone who understands finance knows that money borrowed in 1984 and not fully repaid until 1990 at a total cost of just 15 percent is just a subsidy."

The lessors found an ally in Fortune magazine, which said the bill was a "brazen" attempt by the large industries to convert into cash accumulated tax credits that make them desirable targets of takeover attempts by profitable corporations.

Opponents of the bill say it would cost the Treasury up to $12 billion in 1984, a figure supporters say is without foundation. John Meagher, Washington vice president of LTV, chairman of the Basic Industries Coalition, and a former aide to Conable, released a study over the weekend saying the first year revenue loss would be no more than $3.7 billion.

The bill has "nothing to do with leasing," Meagher said. "It's just a shift in timing. We're going to get this money eventually anyway, unless we go out of business, and ever day it's denied to us it's worth less."

The measure faces tough going in Congress, partly because Jones is not an ally of Ways and Means Chairman Dan Rostenkowski (D-Ill.) and partly because Congress is already reluctantly confronting a self-imposed requirement to raise revenues by $12 billion in 1984, not decrease them.