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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
(in thousands)20232022
Deferred tax assets related to:
Expenses not yet deducted for tax purposes$327,946 $312,445 
Operating lease liabilities354,594 314,804 
Pension liability not yet deducted for tax purposes175,643 168,925 
Net operating loss49,270 49,787 
907,453 845,961 
Deferred tax liabilities related to:
Employee and retiree benefits242,132 225,947 
Inventory92,383 77,866 
Operating lease assets351,821 305,885 
Other intangible assets472,222 468,733 
Property, plant and equipment113,115 91,706 
Other40,264 38,597 
1,311,937 1,208,734 
Net deferred tax liability before valuation allowance(404,484)(362,773)
Valuation allowance(30,273)(27,362)
Total net deferred tax liability$(434,757)$(390,135)
We currently hold approximately $170 million in gross net operating losses, of which approximately $81 million will carry forward indefinitely. The remaining net operating losses of approximately $89 million will begin to expire in 2024.
The components of income before income taxes are as follows:
(in thousands)202320222021
United States$1,164,914 $1,100,584 $762,472 
Foreign577,434 472,018 437,874 
Income before income taxes$1,742,348 $1,572,602 $1,200,346 
The components of income tax expense are as follows:
(in thousands)202320222021
Current:
Federal$201,929 $196,634 $116,425 
State51,244 70,453 34,311 
Foreign130,538 120,594 119,144 
Deferred:
Federal26,166 12,727 24,233 
State10,241 4,981 9,485 
Foreign5,706 (15,488)(2,042)
$425,824 $389,901 $301,556 
The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:
(in thousands)202320222021
Statutory rate applied to income (1)$365,892 $330,246 $252,073 
Plus state income taxes, net of Federal tax benefit48,573 59,593 34,599 
Taxation of foreign operations, net (2)4,666 3,347 2,299 
Foreign rate change - deferred tax remeasurement— — 17,032 
Valuation allowance2,911 (7,153)(2,486)
Other3,782 3,868 (1,961)
$425,824 $389,901 $301,556 
(1)U.S. statutory rates applied to income are as follows: 2023, 2022 and 2021 at 21%.
(2)Our effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.
We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.
We, or one of our subsidiaries, file income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, we are no longer subject to federal, state and local tax examinations by tax authorities for years before 2020 or subject to foreign income tax examinations for years ended prior to 2013. We are currently under audit in some of our state and foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recognized in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recognized uncertain tax positions in connection with the audits; however, we do not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
(in thousands)202320222021
Balance at beginning of year$19,621 $19,501 $23,237 
Additions based on tax positions related to the current year2,584 1,475 2,196 
Additions for tax positions of prior years1,752 89 156 
Reductions for tax positions for prior years(70)(523)(733)
Reduction for lapse in statute of limitations(2,713)(921)(2,843)
Settlements(647)— (2,512)
Balance at end of year$20,527 $19,621 $19,501 
The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2023 and 2022 was approximately $22 million and $21 million, respectively, of which approximately $20 million and $19 million, respectively, if recognized, would affect the effective tax rate.
During the tax years ended December 31, 2023, 2022 and 2021, we paid, received refunds, or accrued insignificant interest and penalties. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
As of December 31, 2023, we estimate that we have an outside basis difference in certain foreign subsidiaries of approximately $1.2 billion, which includes the cumulative undistributed earnings from our foreign subsidiaries. We continue to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.
In 2023, certain countries have enacted legislation and implemented policies resulting from the Organization for Economic Co-operation and Development’s (“OECD”) Anti-Base Erosion and Profit Shifting project under Pillar Two, which establishes a global 15% per-country minimum tax. The rules are applicable for fiscal years starting on or
after December 31, 2023. We estimate an immaterial impact to the tax provision related to the Pillar Two legislation in 2024 and will continue to monitor implementation in the countries in which we operate.