Income Taxes

A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:



	For the Three Months Ended March 31,
	2017		2016
Statutory rate	35.0	%	35.0	%
State taxes	0.1		1.0
Taxes on foreign earnings	(11.2	)	(8.1	)
Credits and net operating loss utilization	(0.7	)	(1.2	)
Purchased intangible assets	1.4		1.1
Manufacturing deduction	(2.1	)	(1.8	)
Other permanent items	0.7		0.6
Other	1.0		0.3
Effective tax rate	24.2	%	26.9	%

For the three months ended March 31, 2017, compared to the same period in 2016, the decrease in our effective tax rate was primarily due to a lower relative percentage of our earnings being recognized in the U.S., a high tax jurisdiction, along with a higher deduction for U.S. manufacturing activities and the favorable settlement of a state tax matter.

Accounting for Uncertainty in Income Taxes

We and our subsidiaries are routinely examined by various taxing authorities. We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2013 or state, local or non-U.S. income tax examinations for years before 2005.

We made payments totaling approximately $56.0 million to the Danish Tax Authority (SKAT) for assessments received for fiscal 2009, 2011 and 2013 regarding withholding taxes and the treatment of certain intercompany transactions involving a Danish affiliate and another of our affiliates. We continue to dispute the assessments for all of these periods and believe that the positions taken in our historical filings are valid.