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 September 30,				For the Nine Months Ended September 30,
	2017		2016		2017		2016
Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
State taxes	0.7		1.1		0.6		1.0
Taxes on foreign earnings	(11.4	)	(10.1	)	(11.4	)	(9.4	)
Credits and net operating loss utilization	(0.7	)	(1.4	)	(0.8	)	(1.3	)
Purchased intangible assets	1.2		1.2		1.3		1.1
Manufacturing deduction	(2.0	)	(1.8	)	(2.1	)	(1.7	)
Other permanent items	0.6		0.2		0.7		0.5
Other	0.4		0.5		0.6		0.4
Effective tax rate	23.8	%	24.7	%	23.9	%	25.6	%

For the three and nine months ended September 30, 2017, compared to the same periods 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. The geographic split of our earnings was affected by milestone and upfront payments in the current year and the spin-off of our hemophilia business, partially offset by growth from the U.S. launch of SPINRAZA and increases in our revenues from anti-CD20 therapeutic programs in the U.S. In addition, in 2017 we are earning a lower benefit from the orphan drug credit due to the FDA's approval of SPINRAZA.

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 2010.

We made payments totaling approximately $60.0 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.