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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES INCOME BEFORE TAXES
| Years Ended December 31,
2022 | 2021 | 2020
U.S. |  | $ | 3,305 |  |  | $ | 3,955 |  |  | $ | 3,318 |
Non-U.S. |  | 3,074 |  |  | 3,280 |  |  | 2,694 |
|  | $ | 6,379 |  |  | $ | 7,235 |  |  | $ | 6,012 |
TAX EXPENSE (BENEFIT)
| Years Ended December 31,
2022 | 2021 | 2020
Tax expense (benefit) consists of |  |  |  |  |  |
Current: |  |  |  |  |  |
U.S. Federal |  | $ | 653 |  |  | $ | 415 |  |  | $ | 475 |
U.S. State |  | 124 |  |  | 146 |  |  | 79 |
Non-U.S. |  | 815 |  |  | 886 |  |  | 768 |
|  | $ | 1,592 |  |  | $ | 1,447 |  |  | $ | 1,322 |
Deferred: |  |  |  |  |  |
U.S. Federal |  | $ | (175) |  |  | $ | 173 |  |  | $ | 234 |
U.S. State |  | (36) |  |  | 37 |  |  | 39 |
Non-U.S. |  | 32 |  |  | (32) |  |  | (448) |
|  | (180) |  |  | 178 |  |  | (175) |
|  | $ | 1,412 |  |  | $ | 1,625 |  |  | $ | 1,147 |
| Years Ended December 31,
2022 | 2021 | 2020
The U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows: |  |  |  |  |  |
U.S. federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Taxes on non-U.S. earnings(1)(2) |  | (0.4) |  |  | (1.4) |  |  | (0.8) |
U.S. state income taxes(1) |  | 1.4 |  |  | 1.5 |  |  | 1.3 |
Reserves for tax contingencies |  | 1.1 |  |  | 2.2 |  |  | (2.6) |
Employee share-based payments |  | (0.9) |  |  | (0.7) |  |  | (1.2) |
Reduction of certain receivables |  | — |  |  | — |  |  | 2.0 |
Restructuring |  | 0.7 |  |  | (1.4) |  |  | — |
U.S. Valuation Allowance |  | (0.2) |  |  | 2.0 |  |  | 0.1 |
All other items—net |  | (0.6) |  |  | (0.7) |  |  | (0.7) |
|  | 22.1 | % |  | 22.5 | % |  | 19.1 | %
(1)Net of changes in valuation allowance. (2)Includes U.S. taxes on non-U.S. earnings. The effective tax rate decreased by 0.4 percentage points in 2022 compared to 2021. The decrease was primarily a result of additional tax expense reported in 2021 arising from a valuation allowance established against a capital loss, partially offset by a tax benefit related to restructuring transactions. In 2022, the valuation allowance was partially released as losses were utilized against a capital gain. Additionally, in 2022, there was lower tax expense reported for contingencies as a result of the release of certain state income tax reserves The Company’s non-U.S. effective tax rate was 27.5%, an increase of approximately 1.5 percentage points compared to 2021. The increase in the non-U.S. effective tax rate was primarily attributable to a 2021 tax benefit recorded for the release of a valuation allowance on net operating losses due to restructuring in Canada, which resulted in more tax expense in 2022 compared to 2021. This increase was partially offset by lower tax expense recorded in 2022 related to tax reserves when compared to 2021. The effective tax rate increased by 3.4 percentage points in 2021 compared to 2020. The increase was primarily due to the establishment of a valuation allowance for deferred tax assets not expected to be realized, incremental tax reserves, a lower tax benefit from restructuring, and the absence of prior year items including tax benefits realized as a result of the favorable resolution of a foreign tax matter related to the spin-off transactions, tax law changes in India, and the resolution of certain U.S. tax matters offset by a non-cash charge related to the reduction of the aggregate carrying value of certain receivables with no corresponding tax benefit. The Company’s non-U.S. effective tax rate was 26.0%, an increase of approximately 14.1 percentage points compared to 2020. The increase in the non-U.S. effective tax rate was primarily attributable to incremental tax reserves, the tax impact of restructuring and the absence of prior year items including the favorable resolution of a foreign tax matter related to the previously completed spin-off transactions, and tax law changes in India. DEFERRED TAX ASSETS (LIABILITIES) The tax effects of temporary differences and tax carryforwards which give rise to future income tax benefits and payables are as follows:
Deferred tax assets: | December 31,
2022 | 2021
Postretirement benefits other than pensions |  | $ | 59 |  |  | $ | 77 |
Asbestos and environmental |  | 545 |  |  | 468 |
Employee compensation and benefits |  | 142 |  |  | 174 |
Lease liabilities |  | 233 |  |  | 242 |
Other accruals and reserves |  | 363 |  |  | 260 |
Net operating losses |  | 695 |  |  | 734 |
Capital loss limitation and carryover |  | 126 |  |  | 151 |
Tax credit carryforwards |  | 163 |  |  | 164 |
Gross deferred tax assets |  | 2,326 |  |  | 2,270 |
Valuation allowance |  | (812) |  |  | (857) |
Total deferred tax assets |  | $ | 1,514 |  |  | $ | 1,413 |
Deferred tax liabilities: |  |  |  |
Pension |  | $ | (1,088) |  |  | $ | (948) |
Property, plant and equipment |  | (233) |  |  | (464) |
Right-of-use asset |  | (212) |  |  | (230) |
Intangibles |  | (818) |  |  | (883) |
Unremitted earnings of foreign subsidiaries |  | (517) |  |  | (426) |
Other asset basis differences |  | (317) |  |  | (334) |
Other |  | (1) |  |  | (2) |
Total deferred tax liabilities |  | (3,186) |  |  | (3,287) |
Net deferred tax liability |  | $ | (1,672) |  |  | $ | (1,874) |
The Company's gross deferred tax assets include $869 million related to non-U.S. operations comprised principally of net operating losses, capital loss and tax credit carryforwards, primarily in Canada, France, Germany, Luxembourg, and the United Kingdom, and deductible temporary differences. The Company maintains a valuation allowance of $683 million against a portion of the non-U.S. gross deferred tax assets. Additionally, a valuation allowance of $129 million is maintained against the U.S. gross deferred tax asset primarily related to capital loss carryovers. The change in the valuation allowance resulted in a decrease of $8 million, an increase of $124 million, and an increase of $105 million to income tax expense in 2022, 2021, and 2020, respectively. In the event the Company determines that it will not be able to realize its net deferred tax assets in the future, the Company will reduce such amounts through an increase to income tax expense in the period such determination is made. Conversely, if the Company determines that it will be able to realize net deferred tax assets in excess of the carrying amounts, the Company will decrease the recorded valuation allowance through a reduction to income tax expense in the period that such determination is made. As of December 31, 2022, the Company recorded a $517 million deferred tax liability on all unremitted foreign earnings based on estimated earnings and profits of approximately $17 billion as of the balance sheet date. As of December 31, 2022, the Company's net operating loss, capital loss and tax credit carryforwards were as follows:
Jurisdiction | Expiration Period | Net Operating and Capital Loss Carryforwards | Tax Credit Carryforwards
U.S. Federal | 2042 |  | $ | 584 |  |  | $ | 94 |
U.S. State | 2042 |  | 449 |  |  | 21 |
Non-U.S. | 2042 |  | 450 |  |  | 53 |
Non-U.S. | Indefinite |  | 2,062 |  |  | — |
|  |  | $ | 3,545 |  |  | $ | 168 |
Many jurisdictions impose limitations on the timing and utilization of net operating loss and tax credit carryforwards. In those instances, whereby there is an expected permanent limitation on the utilization of the net operating loss or tax credit carryforward, the deferred tax asset and amount of the carryforward have been reduced.
| Years Ended December 31,
| 2022 | 2021 | 2020
Change in unrecognized tax benefits: |  |  |  |  |  |
Balance at beginning of year |  | $ | 1,061 |  |  | $ | 991 |  |  | $ | 1,164 |
Gross increases related to current period tax positions |  | 64 |  |  | 93 |  |  | 94 |
Gross increases related to prior periods tax positions |  | 31 |  |  | 39 |  |  | 68 |
Gross decreases related to prior periods tax positions |  | (19) |  |  | (27) |  |  | (256) |
Decrease related to resolutions of audits with tax authorities |  | (3) |  |  | (1) |  |  | (35) |
Expiration of the statute of limitations for the assessment of taxes |  | (8) |  |  | (12) |  |  | (76) |
Foreign currency translation |  | (40) |  |  | (22) |  |  | 32 |
Balance at end of year |  | $ | 1,086 |  |  | $ | 1,061 |  |  | $ | 991 |
As of December 31, 2022, 2021, and 2020, there were $1,086 million, $1,061 million, and $991 million, respectively, of unrecognized tax benefits that if recognized would be recorded as a component of Tax expense. The following table summarizes tax years that remain subject to examination by major tax jurisdictions as of December 31, 2022:
Jurisdiction | Open Tax Years
Examination in progress | Examination not yet initiated
U.S. Federal | 2017-2018 | 2019-2022
U.S. State | 2013-2020 | 2017-2022
Australia | n/a | 2019-2022
Belgium | 2019-2020 | 2021-2022
Canada(1) | 2017-2019 | 2020-2022
China | 2012-2021 | 2022
France | 2019-2021 | 2022
Germany(1) | 2009-2020 | 2021-2022
India | 1999-2021 | 2022
Italy | 2015-2020 | 2021-2022
Netherlands | 2018-2020 | 2021-2022
Switzerland(1) | 2017-2020 | 2021-2022
United Kingdom | 2013-2020 | 2021-2022
(1)Includes provincial or similar local jurisdictions, as applicable. Based on the outcome of these examinations, or as a result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in the Company's financial statements. In addition, the outcome of these examinations may impact the valuation of certain deferred tax assets (such as net operating losses) in future periods. Unrecognized tax benefits for examinations in progress were $640 million, $592 million, and $556 million, as of December 31, 2022, 2021, and 2020, respectively. Estimated interest and penalties related to the underpayment of income taxes are classified as a component of Tax expense in the Consolidated Statement of Operations and totaled $5 million, $79 million, and $80 million for the years ended December 31, 2022, 2021, and 2020, respectively. Accrued interest and penalties were $557 million, $580 million, and $507 million, as of December 31, 2022, 2021, and 2020, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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