Income Taxes

The components of income before income taxes are as follows for the three years ended December 31:



	2014		2013		2012
United States	$	1,094	$	1,018	$	1,155
International	2,439		2,547		2,719
Total Income before income taxes	$	3,533	$	3,565	$	3,874

The provision for income taxes consists of the following for the three years ended December 31:



	2014		2013		2012
United States	$	348	$	314	$	395
International	846		841		848
Total Provision for income taxes	$	1,194	$	1,155	$	1,243

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:



	2014			2013			2012
Goodwill and intangible assets	$	(40	)	$	(14	)	$	(7	)
Property, plant and equipment	(13		)	—			(13		)
Pension and other retiree benefits	19			85			(14		)
Stock-based compensation	11			10			5
Tax loss and tax credit carryforwards	5			(30		)	(39		)
Other, net	(19		)	(33		)	32
Total deferred tax provision	$	(37	)	$	18		$	(36	)

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	2014		2013		2012
Tax at United States statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	0.7		0.4		0.7
Earnings taxed at other than United States statutory rate	(2.3	)	(1.4	)	(2.6	)
Charge for a foreign tax matter ⁽¹⁾	1.9		—		—
Other, net	(1.5	)	(1.6	)	(1.0	)
Effective tax rate	33.8	%	32.4	%	32.1	%

_________


⁽¹⁾	The charge for a foreign tax matter relates to a notice of an adverse decision in a foreign court regarding a tax position taken in prior years received by the Company in the second quarter of 2014.

The components of deferred tax assets (liabilities) are as follows at December 31:



	2014			2013
Deferred tax liabilities:
Goodwill and intangible assets	$	(497	)	$	(475	)
Property, plant and equipment	(380		)	(375		)
Other	(266		)	(237		)
	(1,143		)	(1,087		)
Deferred tax assets:
Pension and other retiree benefits	638			448
Tax loss and tax credit carryforwards	33			28
Accrued liabilities	276			317
Stock-based compensation	119			116
Other	148			95
	1,214			1,004
Net deferred income taxes	$	71		$	(83	)



	2014			2013
Deferred taxes included within:
Assets:
Other current assets	$	256		$	284
Deferred income taxes	76			77
Liabilities:
Deferred income taxes	(261		)	(444		)
Net deferred income taxes	$	71		$	(83	)

Applicable U.S. income and foreign withholding taxes have not been provided on approximately $4,900 of undistributed earnings of foreign subsidiaries at December 31, 2014. These earnings have been and currently are considered to be indefinitely reinvested outside of the U.S. and currently are not subject to such taxes. As the Company operates in over 200 countries and territories throughout the world and due to the complexities in the tax laws and the assumptions that would have to be made, it is not practicable to determine the tax liability that would arise if these earnings were repatriated.

In addition, net tax expense of $251 in 2014, net tax expense of $116 in 2013, and net tax benefits of $80 in 2012 recorded directly through equity predominantly 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, 2014, 2013 and 2012 is summarized below:



	2014			2013			2012
Unrecognized tax benefits:
Balance, January 1	$	199		$	212		$	176
Increases as a result of tax positions taken during the current year	23			23			34
Decreases of tax positions taken during prior years	(11		)	(52		)	(6		)
Increases of tax positions taken during prior years	32			37			10
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations	(10		)	(22		)	(3		)
Effect of foreign currency rate movements	(15		)	1			1
Balance, December 31	$	218		$	199		$	212

If all of the unrecognized tax benefits for 2014 above were recognized, approximately $195 would impact the effective tax rate. Although it is possible that the amount of unrecognized benefits with respect to our uncertain tax positions will increase or decrease in the next 12 months, the Company does not expect material changes.

The Company recognized approximately $4, $5 and $5 of interest expense related to the above unrecognized tax benefits within income tax expense in 2014, 2013 and 2012, respectively. The Company had accrued interest of approximately $24, $24 and $19 as of December 31, 2014, 2013 and 2012, 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, 2009 have been audited by, and settled with, the IRS. 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, 2009. 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.