Income Taxes

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



	2015		2014		2013
United States	$	1,118	$	1,094	$	1,018
International	1,645		2,439		2,547
Total Income before income taxes	$	2,763	$	3,533	$	3,565

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



	2015		2014		2013
United States	$	376	$	348	$	314
International	839		846		841
Total Provision for income taxes	$	1,215	$	1,194	$	1,155

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:



	2015			2014			2013
Goodwill and intangible assets	$	3		$	(40	)	$	(14	)
Property, plant and equipment	(25		)	(13		)	—
Pension and other retiree benefits	36			19			85
Stock-based compensation	11			11			10
Tax loss and tax credit carryforwards	(4		)	5			(30		)
Other, net	98			(19		)	(33		)
Total deferred tax benefit (provision)	$	119		$	(37	)	$	18

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	2015		2014		2013
Tax at United States statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.0		0.7		0.4
Earnings taxed at other than United States statutory rate	(3.6	)	(2.3	)	(1.4	)
Charge for a foreign tax matter ⁽¹⁾	0.5		1.9		—
Venezuela accounting change ⁽²⁾	12.8		—		—
Other, net	(1.7	)	(1.5	)	(1.6	)
Effective tax rate	44.0	%	33.8	%	32.4	%

_________


⁽¹⁾	The charge for a foreign tax matter in 2015 relates to several Supreme Court rulings in a foreign jurisdiction disallowing certain tax deductions which had the effect of reversing prior decisions. The charge for a foreign tax matter in 2014 relates to a notice of an adverse decision in a foreign court regarding a tax position taken in prior years.


⁽²⁾	See Note 14, Venezuela.

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



	2015			2014
Deferred tax liabilities:
Goodwill and intangible assets	$	(458	)	$	(497	)
Property, plant and equipment	(380		)	(380		)
Other	(150		)	(266		)
	(988		)	(1,143		)
Deferred tax assets:
Pension and other retiree benefits	541			638
Tax loss and tax credit carryforwards	30			33
Accrued liabilities	235			276
Stock-based compensation	123			119
Other	151			148
	1,080			1,214
Net deferred income taxes	$	92		$	71



	2015			2014
Deferred taxes included within:
Assets:
Other current assets	$	258		$	256
Deferred income taxes	67			76
Liabilities:
Deferred income taxes	(233		)	(261		)
Net deferred income taxes	$	92		$	71

Applicable U.S. income and foreign withholding taxes have not been provided on approximately $4,600 of undistributed earnings of foreign subsidiaries at December 31, 2015. 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 $78 in 2015, net tax benefit of $251 in 2014, and net tax expense of $116 in 2013 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, 2015, 2014 and 2013 is summarized below:



	2015			2014			2013
Unrecognized tax benefits:
Balance, January 1	$	218		$	199		$	212
Increases as a result of tax positions taken during the current year	20			23			23
Decreases of tax positions taken during prior years	(25		)	(11		)	(52		)
Increases of tax positions taken during prior years	61			32			37
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations	(79		)	(10		)	(22		)
Effect of foreign currency rate movements	(9		)	(15		)	1
Balance, December 31	$	186		$	218		$	199

If all of the unrecognized tax benefits for 2015 above were recognized, approximately $157 would impact the effective tax rate and would result in a cash outflow of approximately $135. 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 $2, $4 and $5 of interest expense related to the above unrecognized tax benefits within income tax expense in 2015, 2014 and 2013, respectively. The Company had accrued interest of approximately $16, $24 and $24 as of December 31, 2015, 2014 and 2013, 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, 2010. 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.