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Taxes on Income (Tables) | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Reconciliation Between Effective Tax Rate and U.S. Statutory Rate | A reconciliation between the effective tax rate for income from continuing operations and the U.S. statutory rate is as follows:
| 2021 |  | 2020 |  | 2019
| Amount |  | Tax Rate |  | Amount |  | Tax Rate |  | Amount |  | Tax Rate
U.S. statutory rate applied to income from continuing operations before taxes | $ | 2,915 |  |  | 21.0 | % |  | $ | 1,231 |  |  | 21.0 | % |  | $ | 1,506 |  |  | 21.0 | %
Differential arising from: |  |  |  |  |  |  |  |  |  |  |
Foreign earnings | (1,446) |  |  | (10.4) |  |  | (965) |  |  | (16.5) |  |  | (461) |  |  | (6.4) |
GILTI and the foreign-derived intangible income deduction | (75) |  |  | (0.5) |  |  | 349 |  |  | 6.0 |  |  | 323 |  |  | 4.5 |
Tax settlements | (275) |  |  | (2.0) |  |  | (13) |  |  | (0.2) |  |  | (139) |  |  | (1.9) |
R&D tax credit | (81) |  |  | (0.6) |  |  | (108) |  |  | (1.8) |  |  | (116) |  |  | (1.6) |
Acquisition of VelosBio | (9) |  |  | (0.1) |  |  | 559 |  |  | 9.5 |  |  | — |  |  | — |
Acquisition of Pandion | 356 |  |  | 2.6 |  |  | — |  |  | — |  |  | — |  |  | — |
Valuation allowances | 102 |  |  | 0.7 |  |  | 37 |  |  | 0.6 |  |  | 115 |  |  | 1.6 |
Restructuring | 61 |  |  | 0.4 |  |  | 105 |  |  | 1.8 |  |  | 39 |  |  | 0.5 |
Acquisition-related costs, including amortization | 8 |  |  | 0.1 |  |  | 38 |  |  | 0.6 |  |  | 70 |  |  | 1.0 |
State taxes | 2 |  |  | — |  |  | 57 |  |  | 1.0 |  |  | (12) |  |  | (0.2) |
Acquisition of OncoImmune | — |  |  | — |  |  | 97 |  |  | 1.7 |  |  | — |  |  | — |
Acquisition of Peloton | — |  |  | — |  |  | — |  |  | — |  |  | 209 |  |  | 2.9 |
Tax Cuts and Jobs Act of 2017 | — |  |  | — |  |  | — |  |  | — |  |  | 117 |  |  | 1.6 |
Other | (37) |  |  | (0.2) |  |  | (47) |  |  | (0.8) |  |  | (86) |  |  | (1.2) |
| $ | 1,521 |  |  | 11.0 | % |  | $ | 1,340 |  |  | 22.9 | % |  | $ | 1,565 |  |  | 21.8 | %
Income Before Taxes | Income from continuing operations before taxes consisted of:
Years Ended December 31 | 2021 |  | 2020 |  | 2019
Domestic | $ | 1,854 |  |  | $ | (3,814) |  |  | $ | (66) |
Foreign | 12,025 |  |  | 9,677 |  |  | 7,237 |
| $ | 13,879 |  |  | $ | 5,863 |  |  | $ | 7,171 |
Taxes on Income | Taxes on income from continuing operations consisted of:
Years Ended December 31 | 2021 |  | 2020 |  | 2019
Current provision |  |  |  |  |
Federal | $ | 74 |  |  | $ | 893 |  |  | $ | 642 |
Foreign | 1,273 |  |  | 969 |  |  | 1,523 |
State | (13) |  |  | 44 |  |  | (40) |
| 1,334 |  |  | 1,906 |  |  | 2,125 |
Deferred provision |  |  |  |  |
Federal | 240 |  |  | (605) |  |  | (328) |
Foreign | (77) |  |  | 64 |  |  | (228) |
State | 24 |  |  | (25) |  |  | (4) |
| 187 |  |  | (566) |  |  | (560) |
| $ | 1,521 |  |  | $ | 1,340 |  |  | $ | 1,565 |
Deferred Income Taxes | Deferred income taxes at December 31 consisted of:
| 2021 |  | 2020
| Assets |  | Liabilities |  | Assets |  | Liabilities
Product intangibles and licenses | $ | — |  |  | $ | 2,933 |  |  | $ | 109 |  |  | $ | 1,250 |
Inventory related | 119 |  |  | 370 |  |  | 43 |  |  | 315 |
Accelerated depreciation | — |  |  | 589 |  |  | — |  |  | 587 |
Equity investments | — |  |  | 335 |  |  | — |  |  | 175 |
Pensions and other postretirement benefits | 487 |  |  | 338 |  |  | 826 |  |  | 248 |
Compensation related | 301 |  |  | — |  |  | 235 |  |  | — |
Unrecognized tax benefits | 75 |  |  | — |  |  | 117 |  |  | — |
Net operating losses and other tax credit carryforwards | 867 |  |  | — |  |  | 764 |  |  | — |
Other | 434 |  |  | 180 |  |  | 743 |  |  | 81 |
Subtotal | 2,283 |  |  | 4,745 |  |  | 2,837 |  |  | 2,656 |
Valuation allowance | (287) |  |  |  |  | (404) |  |  |
Total deferred taxes | $ | 1,996 |  |  | $ | 4,745 |  |  | $ | 2,433 |  |  | $ | 2,656 |
Net deferred income taxes |  |  | $ | 2,749 |  |  |  |  | $ | 223 |
Recognized as: |  |  |  |  |  |  |
Other Assets | $ | 692 |  |  |  |  | $ | 782 |  |  |
Deferred Income Taxes |  |  | $ | 3,441 |  |  |  |  | $ | 1,005 |
Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2021 |  | 2020 |  | 2019
Balance January 1 | $ | 1,537 |  |  | $ | 1,225 |  |  | $ | 1,893 |
Additions related to current year positions | 306 |  |  | 298 |  |  | 199 |
Additions related to prior year positions | 63 |  |  | 110 |  |  | 46 |
Reductions for tax positions of prior years (1) | (230) |  |  | (4) |  |  | (454) |
Settlements (1) | (46) |  |  | (70) |  |  | (356) |
Lapse of statute of limitations (2) | (58) |  |  | (22) |  |  | (103) |
Spin-off of Organon | (43) |  |  | — |  |  | — |
Balance December 31 | $ | 1,529 |  |  | $ | 1,537 |  |  | $ | 1,225 |
(1) Amounts in 2021 and 2019 reflect settlements with the IRS discussed below. (2) Amount in 2019 includes $78 million related to the divestiture of Merck’s Consumer Care business in 2014.

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