Legislation allowing corporations to buy and sell tax breaks was denounced in strong and bipartisan fashion yesterday as the Senate Budget Committee began hearings on a bill to control mushrooming tax expenditures.

"We simply had no idea what we wrought with that," Sen. Nancy L. Kassebaum (R-Kan.) said.

In the face of growing federal deficits, Congress, and particularly Republican and Democratic members of the Senate Budget Committee, are exploring whether new revenues might be raised through so-called tax expenditures--special provisions in the code that let various groups reduce their taxes below the norm.

"Sometime soon Congress is going to have to start addressing the question of tax expenditures, or loopholes, or whatever you want to call them," Sen. Pete V. Domenici (R-N.M.), the committee chairman, said before the hearing, "and leading the parade is leasing."

Under the $749 billion 1981 tax cut bill, corporations were allowed to buy and sell tax breaks--credits and accelerated depreciation--on new investments through paper transactions called "leases." This tax expenditure is expected to cost about $29 billion through 1986, according to Treasury estimates; investment bankers and other sources in the private sector believe the tax losses will be much higher.

The issue of leasing emerged at a hearing on a bill sponsored by Kassebaum that would place new limits on tax expenditures. These expenditures range from capital gains treatment of profits on investments held over one year, costing the Treasury $17.1 billion this year, to the deductibility of charitable contributions, $7.2 billion this year.

Testimony by Alice M. Rivlin, director of the Congressional Budget Office, and estimates by the committee staff showed that tax expenditures are growing at a much faster rate than the spending side of the budget.

Direct federal spending, according to committee charts, went from $232 billion to $709.3 billion over the past decade, an increase of 206 percent, while tax expenditures have grown from $59.8 billion to $266.3 billion, a 345 percent increase.

The Kassebaum bill would restrict tax expenditures, which this past year ran at about 38 percent of federal revenues, to 30 percent, thus forcing a cutback. In addition, any new tax expenditures would have to be approved not only by the Senate Finance Committee and the House Ways and Means Committee but by the two Budget committees and the standing committees with direct legislative jurisdiction over the involved activity (House Energy and Commerce, in the case of energy tax credits, for example).

Along with Kassebaum and Domenici, two Democrats, Edward M. Kennedy (Mass.) and Howard M. Metzenbaum (Ohio), joined in the attack on leasing, the only tax expenditure specifically identified during the hearing.

The most detailed case against corporate tax sales was made by Paul R. McDaniel, a professor at Boston College Law School.

McDaniel argued that the leasing system is actually a modified federal subsidy; "the business receives its federal transfer or welfare payment by selling its excess tax benefits to a profitable corporation."

As a method of providing federal support to marginal corporations, McDaniel argued, this mechanism is far more expensive and less efficient than a direct payment because profitable companies buying tax breaks are going to get a share of the tax benefit, along with lawyers and brokers who further dilute the indirect subsidy going to the poorer firm.

McDaniel estimated that every dollar going to the intended beneficiary of the leasing program ends up costing the federal government a total of $1.60.