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Income Taxes
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes

The components of Income before income taxes are as follows for the years ended December 31:
  
 
2019
 
2018
 
2017
United States
 
$
1,050

 
$
1,175

 
$
1,072

International
 
2,251

 
2,289

 
2,415

Total Income before income taxes
 
$
3,301

 
$
3,464

 
$
3,487



The Provision for income taxes consists of the following for the years ended December 31:
  
 
2019
 
2018
 
2017
United States
 
$
180

 
$
213

 
$
338

International
 
594

 
693

 
975

Total Provision for income taxes
 
$
774

 
$
906

 
$
1,313



Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in the current provision for taxes being higher (lower) than the total provision for income taxes as follows:
  
 
2019
 
2018
 
2017
Goodwill and intangible assets
 
$
34

 
$
2

 
$
135

Property, plant and equipment
 
12

 
(15
)
 
84

Pension and other retiree benefits
 
(13
)
 
(7
)
 
(192
)
Stock-based compensation
 
(1
)
 
9

 
(28
)
Tax credits and tax loss carryforwards
 
3

 
(4
)
 
(4
)
Deferred withholding tax
 
(21
)
 
(100
)
 
(119
)
Other, net
 
(33
)
 
62

 
16

Total deferred tax benefit (provision)
 
$
(19
)
 
$
(53
)
 
$
(108
)


The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as reflected in the Consolidated Statements of Income is as follows:
Percentage of Income before income taxes
 
2019
 
2018
 
2017
Tax at United States statutory rate
 
21.0
 %
 
21.0
 %
 
35.0
 %
State income taxes, net of federal benefit
 
0.6

 
1.0

 
0.5

Earnings taxed at other than United States statutory rate
 
4.7

 
5.6

 
(3.4
)
Charge for U.S. tax reform(1)
 
—

 
2.3

 
7.9

Excess tax benefits from stock-based compensation
 
(0.2
)
 
(0.3
)
 
(1.4
)
Foreign Tax Credit Carryback(2)
 
—

 
(1.7
)
 
—

Benefit for foreign tax matters(3)
 
(0.9
)
 
(0.4
)
 
—

Foreign-derived intangible income benefit
 
(1.3
)
 
(1.1
)
 
—

Other, net
 
(0.5
)
 
(0.2
)
 
(0.9
)
Effective tax rate
 
23.4
 %
 
26.2
 %
 
37.7
 %

_________
(1) 
On December 22, 2017, the TCJA was enacted, which, among other things, lowered the U.S. corporate income tax rate to 21% from 35% and established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. Beginning in 2018, the TCJA also requires a minimum tax on certain earnings generated by foreign subsidiaries while providing for tax-free repatriation of such earnings through a 100% dividends-received deduction. The Company’s effective income tax rate in 2017 included a provisional charge of $275, recorded in the fourth quarter of 2017, based on its initial analysis of the TCJA using information and estimates available as of February 15, 2018, the date on which the Company filed its Annual Report on Form 10-K for the year ended December 31, 2017. During 2018, the Company finalized its assessment of the impact of the TCJA and recognized an additional tax expense of $80 reflecting the impact of transition tax guidance issued by the U.S. Treasury and the update of certain estimates and calculations based on information available through the end of 2018. Any further guidance issued after December 31, 2018 may have an impact to the Company’s Provision for income tax in the period such guidance is effective.
(2) 
In 2018, the Company generated excess foreign taxes associated with its foreign branch operations which are being carried back to 2017. This item is not expected to be recurring.
(3) 
In December 2019, the Swiss government enacted changes to its corporate tax regime, which included, among other items, the repeal of certain preferential tax regimes and an increase to the cantonal tax rate for future periods. Additionally, the government provided transition rules which allowed companies to record goodwill for tax purposes, partially offsetting the impact on cash taxes of the higher cantonal rate over the next ten years. As a result of these changes, the Company recorded an estimated net benefit of $29 to the Provision for income taxes. In 2018, the benefit from a tax matter of $15 relates to several Supreme Court and Administrative Court rulings in a foreign jurisdiction allowing certain tax deductions which had the effect of reversing prior decisions.


The components of deferred tax assets (liabilities) are as follows at December 31:
  
 
2019
 
2018
Deferred tax liabilities:
 
 
 
 
Goodwill and intangible assets
 
$
(598
)
 
$
(344
)
Property, plant and equipment
 
(303
)
 
(311
)
Deferred withholding tax
 
(207
)
 
(181
)
Other
 
(46
)
 
(75
)
Total deferred tax liabilities
 
(1,154
)
 
(911
)
Deferred tax assets:
 
 

 
 

Pension and other retiree benefits
 
381

 
354

Tax credits and tax loss carryforwards
 
93

 
89

Accrued liabilities
 
221

 
180

Stock-based compensation
 
88

 
95

Other
 
100

 
164

Total deferred tax assets
 
883

 
882

Valuation Allowance
 
$
(59
)
 
$
(54
)
Net deferred tax assets
 
$
824

 
$
828

Net deferred income taxes
 
$
(330
)
 
$
(83
)

 
 
2019
 
2018
Deferred taxes included within:
 
 
 
 
Assets:
 
 
 
 
Deferred income taxes
 
$
177

 
$
152

Liabilities:
 
 
 
 
Deferred income taxes
 
(507
)
 
(235
)
Net deferred income taxes
 
$
(330
)
 
$
(83
)


Applicable U.S. income and foreign withholding taxes have been provided on substantially all of the Company’s accumulated earnings of foreign subsidiaries.

Net tax benefit of $13 in 2019, net tax benefit of $2 in 2018, and net tax benefit of $37 in 2017 were recorded directly through equity. The net tax benefit in 2019 predominantly includes current and future tax impacts related to benefit plans. The amounts in 2018 and 2017 include current and future tax impacts related to employee equity compensation and benefit plans.

The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on an income tax return.

Unrecognized tax benefits activity for the years ended December 31, 2019, 2018 and 2017 is summarized below:
  
 
2019
 
2018
 
2017
Unrecognized tax benefits:
 
 
 
 
 
 
Balance, January 1
 
$
190

 
$
214

 
$
201

Increases as a result of tax positions taken during the current year
 
14

 
14

 
13

Decreases of tax positions taken during prior years
 
(21
)
 
(37
)
 
(9
)
Increases of tax positions taken during prior years
 
20

 
9

 
15

Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations
 
(30
)
 
(6
)
 
(15
)
Effect of foreign currency rate movements
 
—

 
(4
)
 
9

Balance, December 31
 
$
173

 
$
190

 
$
214



If all of the unrecognized tax benefits for 2019 above were recognized, approximately $161 would impact the effective tax rate and would result in a cash outflow of approximately $170. Although it is possible that the amount of unrecognized benefits with respect to our uncertain tax positions will increase or decrease in the next twelve months, the Company does not expect material changes.

The Company recognized approximately $0, $1 and $11 of interest expense related to the above unrecognized tax benefits within income tax expense in 2019, 2018 and 2017, respectively. The Company had accrued interest of approximately $23, $27 and $28 as of December 31, 2019, 2018 and 2017, respectively.

The Company and its subsidiaries file U.S. federal income tax returns as well as income tax returns in many state and foreign jurisdictions. All U.S. federal income tax returns through December 31, 2011 have been audited by the IRS and there are limited matters which the Company plans to appeal for years 2010 through 2011, the settlement of which is not expected to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. With a few exceptions, the Company is no longer subject to U.S. state and local income tax examinations for income tax returns through December 31, 2013. In addition, the Company has subsidiaries in various foreign jurisdictions that have statutes of limitations for tax audits generally ranging from three to six years.

The Company has made an accounting policy election to treat Global Intangible Low-Taxed Income taxes as a current period expense rather than including these amounts in the measurement of deferred taxes.