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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
Income Taxes Income Taxes
Income before income taxes:
Year Ended December 31,
202320222021
Domestic$696.0 $789.3 $845.9 
International1,296.9 1,156.1 1,142.9 
Income Before Income Taxes$1,992.9 $1,945.4 $1,988.8 
Income tax expense (benefit):
Year Ended December 31,
202320222021
Current:   
U.S. federal$154.2 $180.1 $144.0 
U.S. state and local34.8 57.0 16.5 
International330.8 287.4 303.9 
 519.8 524.5 464.4 
Deferred:   
U.S. federal10.9 11.1 40.0 
U.S. state and local1.3 (0.3)(11.6)
International(7.1)11.5 (4.1)
 5.1 22.3 24.3 
Income Tax Expense$524.9 $546.8 $488.7 
Reconciliation from the statutory U.S. federal income tax rate to effective tax rate:
Year Ended December 31,
202320222021
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
U.S. state and local income taxes, net of U.S. federal income tax benefit1.4 2.3 0.2 
Impact of foreign operations3.9 3.5 3.6 
Other, including impact of war in Ukraine— 1.3 (0.2)
Effective tax rate26.3 %28.1 %24.6 %
Our effective tax rate for 2023 decreased year-over-year to 26.3% from 28.1%. The higher effective tax rate for 2022 was predominantly due to the non-deductibility of the $113.4 million of charges recorded in the first quarter of 2022, arising from the effects of the war in Ukraine, as well as an additional increase in income tax expense of $4.8 million related to the disposition of our businesses in Russia.
The Inflation Reduction Act of 2022, or IRA, levies a 1% excise tax on net stock repurchases after December 31, 2022. The excise tax is recorded as a cost of acquiring treasury stock and is not material. Additionally, the IRA imposes a 15% corporate alternative minimum tax, or CAMT, for tax years beginning after December 31, 2022. The CAMT is not expected to have a material impact on our results of operations or financial position.
Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development, or OECD. A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.
Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. We are continuing to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business. We do not expect the provisions effective in 2024 will have a materially adverse impact on our results of operations, financial position or cash flows.
The Tax Cuts and Jobs Act of 2017, or the Tax Act, imposed a one-time tax, the transition tax, on the accumulated earnings of foreign subsidiaries. At December 31, 2023 and 2022, the remaining transition tax liability was $68.9 million and $88.8 million, respectively. The transition tax is expected to be fully paid by 2026. The Tax Act also implemented a territorial tax system that allows us to repatriate earnings of our foreign subsidiaries without incurring additional U.S. tax by providing a 100% dividend exemption. While a territorial tax system limits U.S. federal income tax to domestic source income, foreign source income is subject to tax in the appropriate foreign jurisdiction at the local rate, which in certain jurisdictions may be higher than the U.S. federal statutory income tax rate of 21%. Therefore, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S. federal statutory income tax rate. The international tax rate differentials in 2023 and 2022 are primarily attributed to our earnings in Germany, Australia, Italy, Japan and Canada being taxed at higher rates than the U.S. statutory tax rate.
We have elected to account for any tax on the global intangible low-taxed income, or GILTI, in the period in which it is incurred. We provided $17.0 million and $10.9 million in 2023 and 2022, respectively, for tax impact of GILTI.
Deferred tax assets and liabilities and balance sheet classification:
December 31,
20232022
Deferred tax assets:  
Compensation$153.8 $197.6 
Tax loss and credit carryforwards78.6 77.1 
Basis differences from acquisitions41.2 31.0 
Basis differences from short-term assets and liabilities33.3 20.5 
Other, net19.5 (18.6)
Deferred tax assets326.4 307.6 
Valuation allowance(18.9)(21.1)
Deferred tax assets, net$307.5 $286.5 
Deferred tax liabilities:  
Goodwill and intangible assets$687.3 $653.3 
Unremitted foreign earnings71.1 34.9 
Basis differences from investments3.8 6.9 
Financial instruments0.9 0.3 
Deferred tax liabilities$763.1 $695.4 
Long-term deferred tax assets$73.5 $66.8 
Long-term deferred tax liabilities$529.1 $475.7 
We have concluded that it is more likely than not that we will be able to realize our net deferred tax assets in future periods because results of future operations are expected to generate sufficient taxable income. At December 31, 2023 and 2022, the valuation allowance of $18.9 million and $21.1 million, respectively, relates to tax losses and tax credit carryforwards in the U.S. and in international jurisdictions. Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from 2024 to 2043, which is longer than the forecasted utilization of such carryforwards.
Reconciliation of unrecognized tax benefits:
December 31,
20232022
January 1$167.6 $162.8 
Additions:  
Current year tax positions3.3 2.7 
Prior year tax positions4.3 4.7 
Reduction of prior year tax positions(7.9)(1.5)
Settlements— (0.9)
Foreign currency translation0.5 (0.2)
December 31$167.8 $167.6 
Substantially all the liability for uncertain tax positions is recorded in long-term liabilities. At December 31, 2023 and 2022, approximately $161.7 million and $161.8 million, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.
Income tax expense in 2023, 2022 and 2021 includes $3.2 million, $4.3 million and $2.1 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns. At December 31, 2023 and 2022, accrued interest and penalties were $19.9 million and $15.9 million, respectively.
We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the U.K., France and Germany. The Internal Revenue Service has completed its examination of our U.S. federal tax returns through 2017. Tax returns in the U.K., France and Germany have been examined through 2021, 2019 and 2015, respectively.