Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense was $12.7 million (a 13.2% effective tax rate) for the second quarter of 2019 and income tax benefit was $15.6 million (a 49.6% effective tax rate) for the second quarter of 2018. Income tax expense was $19.1 million (a 15.3% effective tax rate) for June year to date 2019 and income tax benefit was $9.2 million (a (366.2%) effective tax rate) for June year to date 2018. These amounts were impacted by changes in the fair value of the Company’s investment in Persol Holdings, which resulted in a charge of $18.7 million for the second quarter of 2019 and $22.8 million for June year to date 2019, compared to a benefit of $16.2 million for the second quarter of 2018 and $8.9 million for June year to date 2018. The second quarter of 2019 benefitted by $14.3 million from the release of a valuation allowance in the United Kingdom, offset by a $3.9 million charge for recording a valuation allowance in Germany.

Our tax expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of non-taxable investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, the tax effects of stock compensation, and changes in the fair value of the Company’s investment in Persol Holdings, which are treated as discrete since they cannot be estimated.

The work opportunity credit program is a temporary provision in the U.S. tax law and expires for employees hired after 2019. While the program has routinely been extended, it is uncertain whether it will again be extended. In the event the program is not renewed, we will continue to receive credits for qualified employees hired prior to 2020.