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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the U.S. and foreign components of earnings before income taxes and the related income tax expense (in thousands):
Years Ended December 31,
202220212020
Earnings before income taxes:
United States$274,415 $200,657 $154,788 
Foreign100,018 91,900 73,664 
$374,433 $292,557 $228,452 
Income tax expense:
Current:
U.S. Federal$61,245 $29,478 $38,732 
U.S. State and local15,788 7,391 8,203 
Foreign26,043 24,485 22,123 
103,076 61,354 69,058 
Deferred:
U.S. Federal(7,267)11,104 (10,048)
U.S. State and local(1,153)3,239 (1,779)
Foreign(831)(2,485)(1,419)
(9,251)11,858 (13,246)
$93,825 $73,212 $55,812 
The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate and our income tax expense (dollars in thousands):
202220212020
Statutory federal income tax rate$78,631 21.0 %$61,437 21.0 %$47,975 21.0 %
State income tax expense, net of federal income tax benefit
13,962 3.7 10,666 3.6 6,280 2.7 
Audits and adjustments, net2,273 0.6 2,131 0.7 662 0.3 
Change in valuation allowances(2,551)(0.7)1,317 0.5 476 0.2 
Foreign income taxed at different rates5,660 1.5 4,308 1.5 3,825 1.7 
Research and other credits(3,870)(1.0)(4,352)(1.5)(1,858)(0.8)
Other, net(280)— (2,295)(0.8)(1,548)(0.7)
Effective tax rate$93,825 25.1 %$73,212 25.0 %$55,812 24.4 %
On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic, which included, among other things, provisions relating to net operating loss carrybacks and other beneficial income tax changes. In 2020, we recorded a tax benefit of approximately $1,712,000 related to the CARES Act, which was reflected in our effective tax rate reconciliation in ‘Other, net’.
As of December 31, 2022, we have accumulated undistributed earnings generated by our foreign subsidiaries, most of which have been taxed in the U.S. as a result of the Tax Cuts and Jobs Act of 2017. For foreign subsidiary earnings not yet taxed under these provisions, we continue to assert permanent reinvestment of earnings earned in foreign jurisdictions which impose a withholding tax on dividends and, accordingly, have not accrued any additional income
or withholding taxes on the potential repatriation of these earnings. At the present time, given the various complexities involved in repatriating earnings, it is not practicable to estimate the amount of tax that may be payable if these earnings were not reinvested indefinitely.
The significant components of deferred tax assets and liabilities are as follows (in thousands):
December 31,
20222021
Deferred tax assets:
Net operating losses$24,571 $25,791 
Foreign tax credits10,681 13,518 
Other37,315 27,445 
Gross deferred tax assets72,567 66,754 
Valuation allowances(32,546)(36,948)
Total deferred tax assets40,021 29,806 
Deferred tax liabilities:
Goodwill and other intangibles(38,593)(49,987)
Property and equipment(26,905)(19,351)
Other(1,744)(1,852)
Total deferred tax liabilities(67,242)(71,190)
Net deferred tax liabilities$(27,221)$(41,384)
The net non-current deferred tax assets and liabilities are as follows (in thousands):
December 31,
20222021
Net non-current deferred tax assets, which are included in "Other assets"
$5,623 $5,689 
Net non-current deferred tax liabilities(32,844)(47,073)
Net deferred tax liabilities$(27,221)$(41,384)
As of December 31, 2022, we have U.S. state net operating loss carryforward (“NOLs”) that will expire between 2021 and 2040. We also have foreign NOLs of $84,328,000, certain of which will expire between 2023 and 2028, while the majority have no expiration date. Certain state NOLs relate to pre-acquisition losses from acquired subsidiaries and are subject to annual limitations as to their use under the provisions of Internal Revenue Code Section 382.
We have provided valuation allowances for certain of our deferred tax assets where we believe it is more likely than not that the related tax benefits will not be realized. At December 31, 2022 and 2021, our valuation allowances totaled $32,546,000 and $36,948,000, respectively, relating primarily to state and foreign NOLs and foreign tax credits. Changes to our valuation allowance for the year ended December 31, 2022 were driven by the expiration of foreign tax credits and changes in certain NOLs against which a valuation allowance had been recorded.
As of December 31, 2022 and 2021, we had approximately $14,814,000 and $12,664,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $1,642,000 and $1,250,000, respectively, related to accrued interest. The changes in the unrecognized tax benefits balance during the year reflect additions for tax positions taken in prior and current periods, net of reductions related to audit settlements and statute expirations.
In the future, if recognized, the liability associated with uncertain tax positions would affect our effective tax rate. We do not believe there will be any changes over the next 12 months that would have a material effect on our effective tax rate.
We are currently under audit in various jurisdictions for tax years 2015 through 2020. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that the examination phase of these audits may be concluded within the next 12 months which could significantly increase or decrease the balance of our gross unrecognized tax benefits. However, based on the status of the various examinations in multiple jurisdictions, an estimate of the range of reasonably possible outcomes cannot be made at this time, but the estimated effect on our income tax expense and net earnings is not expected to be significant.
In the U.S., federal income tax returns for years subsequent to 2015 remain open to examination. For state and foreign jurisdictions, the statute of limitations generally varies between three and ten years. However, to the extent allowable by law, the tax authorities may have a right to examine and make adjustment to prior periods when amended returns have been filed, or when net operating losses or tax credits were generated and carried forward for subsequent utilization.