Just before adjourning for the Memorial Day recess, a justly embarrassed Senate tacked an amendment onto the supplemental appropriations bill to repeal the generous congressional tax breaks enacted last year. The 1981 legislation had authorized each member of Congress to claim a $75-a-day tax deduction every day the House or Senate was in session. Because that deduction was automatic and couldn't be challenged by the IRS, members had put themselves in a substantially better position than ordinary taxpayers. The public outcry--34,000 letters of protest were received by the IRS--was predictable.

The issue is not settled by the Senate vote. The House has not acted to repeal the tax break, and even if it does, the president is expected to veto the bill to which it is attached--for authorizing a budget-busting mortgage interest subsidy program.

It's just as well that there is still time for further consideration of the tax provision, for what the Senate did on Thursday is defective. In repealing the automatic $75-a-day deduction, senators simply reinstated the old 1954 law, which sets an unrealistic $3,000 limit on business deductions available to members of Congress. Members do have legitimate business expenses, especially if they maintain two homes, and those expenses should be deductible in the same way any ordinary businessman's expenses are. This means that records must be kept and only substantiated expenditures deducted. And it means facing squarely the question of which of two residences is actually home.

There has been a presumption that a member's principal residence is in his home state and that his Washington expenses are deductible. But this is not always the reality. For any other taxpayer, the IRS determines in each individual case where the principal residence is located. That's the way it should be with Congress. Moreover, since the ordinary taxpayer does not have an arbitrary dollar ceiling on his business deductions, neither should the legislators.