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INCOME TAXES
 12 Months Ended
Oct. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted into law in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as enhanced interest deductibility, repeal of the 80% limitation with respect to net operating losses arising in taxable years 2018, 2019 and 2020, and additional depreciation deductions related to qualified improvement property. Further, on December 27, 2020, the Consolidated Appropriations Act of 2021 was enacted, which extended or expanded upon the income tax provisions outlined in the CARES Act. The Company has concluded its analysis of these provisions as October 31, 2021 and has determined that the CARES Act and Consolidated Appropriations Act of 2021 did not have a material impact on the Company’s income taxes for 2021.
The provision for income taxes consists of the following:
Year Ended October 31,
(in millions)202120202019
Current
Federal$45.0 $(9.7)$26.6 
State and local15.5 3.3 6.1 
Non-U.S.56.3 53.0 35.9 
Total Current116.8 46.6 68.6 
Deferred
Federal(33.0)7.9 2.1 
State and local(9.9)10.2 0.9 
Non-U.S.(4.3)(1.4)(0.9)
Total Deferred(47.2)16.7 2.1 
Tax expense$69.6 $63.3 $70.7 

The U.S. income before income tax was $239.3 million, $25.5 million and $129.9 million in 2021, 2020 and 2019, respectively. The non-U.S. income before income tax expense was $239.2 million, $160.4 million and $132.1 million in 2021, 2020 and 2019, respectively.
The following is a reconciliation of the provision for income taxes based on the federal statutory rate to the Company’s effective income tax rate:
Year Ended October 31,
202120202019
Federal statutory rate21.00 %21.00 %21.00 %
Impact of foreign tax rate differential0.70 %0.49 %0.10 %
State and local taxes, net of federal tax benefit0.93 %5.71 %1.99 %
Net impact of changes in valuation allowances(2.57)%(15.23)%2.41 %
Non-deductible write-off and impairment of goodwill and other intangible assets— %4.02 %0.29 %
Return to provision(2.73)%(1.85)%(1.27)%
Permanent book-tax differences0.86 %16.56 %(0.87)%
Withholding taxes2.86 %5.28 %2.43 %
Tax credits(1.56)%(2.60)%(3.33)%
Capital losses(5.70)%(6.34)%— %
Other items, net0.73 %6.97 %4.23 %
Company's effective income tax rate14.52 %34.01 %26.98 %

The primary items which decreased the Company’s effective income tax rate from the federal statutory rate in 2021 were capital losses, which are expected to reduce capital gains resulting from the sale of timberland; releases of unrecognized tax benefits as a result of the expiration of statute of limitations; decreases in valuation allowances; and other favorable return to provision adjustments and audit settlements. These reductions were offset by an increase in withholding taxes and other immaterial items.
The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2020 were state and local taxes, non-deductible goodwill from divestment of the CPG business, increases in permanent book-tax differences including a one-time elimination related to an intra-company sale and withholding tax liabilities. Increases were offset by a reduction in valuation allowances as a result of utilization of foreign tax credits.
The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2019 were state and local taxes, increases in valuation allowances and withholding tax liabilities.
The components of the Company’s deferred tax assets and liabilities as of October 31 for the years indicated were as follows:
(in millions)20212020
Deferred tax assets
Net operating loss and other carryforwards$149.0 $179.3 
Pension liabilities— 12.9 
Incentive liabilities16.2 8.2 
Workers compensation accruals10.5 10.0 
Inventories6.4 7.8 
Operating lease liabilities74.4 76.9 
State income taxes11.6 10.2 
Other reserves18.4 21.0 
Deferred compensation2.2 2.4 
Other36.1 28.5 
Total deferred tax assets324.8 357.2 
Valuation allowance(132.7)(146.4)
Net deferred tax assets$192.1 $210.8 
Deferred tax liabilities
Properties, plants and equipment$134.9 $158.1 
Operating lease assets74.4 76.9 
Timberland transactions51.0 74.2 
Goodwill and other intangible assets190.2 200.2 
Pension liabilities4.5 — 
Other38.4 29.3 
Total deferred tax liabilities493.4 538.7 
Net deferred tax liability$301.3 $327.9 

As of October 31, 2021 and 2020, the Company had deferred income tax benefits from net operating loss and other tax credit carryforwards of $149.0 million and $179.3 million, respectively. For fiscal year ended October 31, 2021, these carryforwards are consisted of $12.3 million, $21.8 million and $110.4 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. As of October 31, 2020, these carryforwards are comprised of $30.6 million, $25.1 million and $123.6 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. The Company has recorded valuation allowances of $116.8 million and $136.9 million against non-U.S. deferred tax assets as of October 31, 2021 and 2020, respectively. The Company has also recorded valuation allowances against U.S. deferred tax assets of $15.9 million and $9.5 million, as of October 31, 2021 and 2020, respectively. The Company had net changes in valuation allowances in 2021 of $13.7 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions)202120202019
Balance of unrecognized tax benefit at November 1$36.0 $38.8 $36.2 
Increases in tax positions for prior years1.2 10.1 5.1 
Decreases in tax positions for prior years— (10.5)(0.7)
Increases in tax positions for current years1.7 2.6 4.3 
Settlements with taxing authorities— — (3.6)
Lapse in statute of limitations(8.0)(5.5)(2.0)
Currency translation0.1 0.5 (0.5)
Balance at October 31$31.0 $36.0 $38.8 

The 2021 net decrease in unrecognized tax benefits is primarily related to decreases in unrecognized tax benefits related lapses in statute of limitations. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions
and various non-U.S. jurisdictions and is subject to audit by various taxing authorities for 2014 through the current year. The Company has completed its U.S. federal tax audit for the tax years through 2015.
The October 31, 2021, 2020, 2019 balances include $31.0 million, $36.0 million and $38.8 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The Company also recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense net of tax, as applicable. As of October 31, 2021 and 2020, the Company had accrued for the payment of interest and penalties in the amounts of $7.7 million and $7.2 million, respectively.
The Company has estimated the reasonably possible expected net change in unrecognized tax benefits through October 31, 2021 under ASC 740, "Income Taxes." The Company’s estimate is based on lapses of the applicable statutes of limitations, settlements and payments of uncertain tax positions. Though actual results may materially differ, the estimated net decrease in unrecognized tax benefits for the next 12 months could be up to $14.0 million.