[JOINT COMMITTEE PRINT] GENERAL EXPLANATION OF THE REVENUE ACT OF 1978 (H.R. 13511, 95TH CONGRESS; PUBLIC LAW 95-600) PREPARED BY THE STAFF OF THE JOINT COMMITTEE ON TAXATION MARCH 12, 1979 For sale by the Superintendent of Documents, U.S. Government Printing Office LETTER OF TRANSMITTAL CONGRESS OF THE UNITED STATES, Hon. AL ULLMAN, Chairman, DEAR MESSRS. CHAIRMEN: While committee reports explain the position of the House Committee on Ways and Means or the position of the Senate Committee on Finance, they do not in all cases explain the tax legislation which is finally passed by the Congress. This becomes particularly important in the case of major legislation in which there are many differences between the bill as passed by the House and as passed by the Senate, and the bill which finally becomes public law. The Revenue Act of 1978, because of its comprehensive scope and the many changes which were made in the House bill by the Senate and subsequently by the conferees, is an illustration of a case where the differences were especially significant. This document represents the effort by the staff of the Joint Committee on Taxation to provide an explanation of the Revenue Act of 1978 as finally enacted and is comparable to a number of similar documents prepared by the staff on other revenue acts in recent years. For the most part, where provisions were unchanged in conference and described in either the House or Senate report, that explanation is used in this document. No attempt is made here to carry the explanation further than is customary in the case of committee reports; therefore, this explanation does not deal with issues which are customarily explained in regulations or rulings. The first major part of the document provides the legislative history of the Revenue Act of 1978, including references to the sources of legislative history for provisions that were added as Senate amendments where there were separately reported bills on those provisions. The second part is a summary of the various provisions. The third part presents the general reasons for the legislation. The fourth part contains the revenue estimates on the legislation as finally enacted; and the fifth part is an explanation of the provisions in the order in which they appear in the public law. This material was prepared by the staff of the Joint Committee' on Taxation, with consultation with the staffs of the House Committee on Ways and Means and the Senate Committee on Finance, after the Revenue Act of 1978 was passed. It has not been reviewed by the tax committees, and therefore only reflects the staff's view as to the intent of Congress. Sincerely yours, BERNARD M. SHAPIRO, CONTENTS Transmittal Letter. I. Legislative History of the Revenue Act of 1978... IV. Revenue Effects of Tax Provisions of the Act_ V. General Explanation of the Revenue Act of 1978. Policy with respect to additional tax reductions (sec. 3)- TITLE I-INDIVIDUAL INCOME TAX PROVISIONS A. Individual Income Tax Reductions and Extensions__ 1. Widening of tax brackets, rate cuts, increase in zero bracket amount, and fiscal year taxpayers Increase in the personal exemption (sec. 102).. Earned income credit (secs. 103-105). B. Itemized Deductions; Unemployment Compensation; 1. Repeal of nonbusiness deduction for State and local taxes on gasoline and other motor fuels 2. Tax treatment of unemployment compensation 3. Political contributions (sec. 113). Deferred compensation payments to independent 4. Tax treatment of cafeteria plans (sec. 134).. 5. Certain cash or deferred arrangements (sec.135)- D. Employee Stock Ownership Plans. 1. Employee stock ownership plans (sec. 141)_. 2. Estate tax exclusion for certain lump sum distributions (sec. 142) - - . 94 |