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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Provision for Income Taxes | Our income tax expense consisted of the following for the year ended December 31 (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019 |  | 2018
Current: |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 114 | ​ | $ | 204 | ​ | $ | 256
State | ​ |  | 91 | ​ |  | 94 | ​ |  | 132
Foreign | ​ |  | 27 | ​ | ​ | 36 | ​ | ​ | 40
​ | ​ |  | 232 | ​ | ​ | 334 | ​ | ​ | 428
Deferred: | ​ |  |  | ​ | ​ |  | ​ | ​ |
Federal | ​ |  | 149 | ​ | ​ | 94 | ​ | ​ | 59
State | ​ |  | 10 | ​ | ​ | 8 | ​ | ​ | (32)
Foreign | ​ |  | 6 | ​ | ​ | (2) | ​ | ​ | (2)
​ | ​ |  | 165 | ​ | ​ | 100 | ​ | ​ | 25
Income tax expense | ​ | $ | 397 | ​ | $ | 434 | ​ | $ | 453
U.S. Federal Statutory Income Tax Rate Reconciled to Effective Rate | The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  |  | 2019 |  | ​ | 2018 |
Income tax expense at U.S. federal statutory rate |  | 21.00 | % |  | 21.00 | % | ​ | 21.00 | %
State and local income taxes, net of federal income tax benefit |  | 4.46 |  |  | 4.39 |  | ​ | 4.41 | ​
Impacts of enactment of tax reform |  | — |  |  | — |  | ​ | (0.51) | ​
Federal tax credits |  | (3.78) |  |  | (4.38) |  | ​ | (2.44) | ​
Taxing authority audit settlements and other tax adjustments |  | (0.17) |  |  | (0.74) |  | ​ | (3.85) | ​
Tax impact of equity-based compensation transactions |  | (1.12) |  |  | (0.91) |  | ​ | (0.54) | ​
Tax impact of impairments |  | (0.35) |  |  | 0.72 |  | ​ | 0.03 | ​
Tax rate differential on foreign income |  | 0.33 |  |  | 0.40 |  | ​ | 0.43 | ​
Other |  | 0.57 |  |  | 0.13 |  | ​ | 0.51 | ​
Effective income tax rate |  | 20.94 | % |  | 20.61 | % | ​ | 19.04 | %
Summary of income source | For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019 |  | 2018
Domestic | ​ | $ | 1,780 | ​ | $ | 2,025 | ​ | $ | 2,235
Foreign (a) | ​ |  | 113 | ​ | ​ | 80 | ​ | ​ | 141
Income before income taxes | ​ | $ | 1,893 | ​ | $ | 2,105 | ​ | $ | 2,376
(a) | Foreign income before income taxes for the year ended December 31, 2019 includes a $52 million impairment charge related to our minority-owned investment in a waste conversion technology business. See Note 12 for further discussion.
Components of Net Deferred Tax Assets (Liabilities) | The components of net deferred tax liabilities as of December 31 are as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019
Deferred tax assets: |  | ​ |  |  | ​ |
Net operating loss, capital loss and tax credit carry-forwards | ​ | $ | 186 | ​ | $ | 150
Landfill and environmental remediation liabilities | ​ |  | 57 | ​ |  | 156
Operating lease liabilities | ​ |  | 131 | ​ |  | 114
Miscellaneous and other reserves, net | ​ |  | 99 | ​ |  | 150
Subtotal | ​ |  | 473 | ​ |  | 570
Valuation allowance | ​ |  | (150) | ​ |  | (162)
Deferred tax liabilities: | ​ |  |  | ​ |  |
Property and equipment | ​ |  | (956) | ​ |  | (842)
Goodwill and other intangibles | ​ |  | (1,059) | ​ |  | (865)
Operating lease right-of-use assets | ​ |  | (114) | ​ |  | (108)
Net deferred tax liabilities | ​ | $ | (1,806) | ​ | $ | (1,407)
Summary of unrecognized tax benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest, is as follows (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019 |  | 2018
Balance as of January 1 | ​ | $ | 40 | ​ | $ | 36 | ​ | $ | 109
Additions based on tax positions related to the current year | ​ |  | 5 | ​ |  | 5 | ​ |  | 6
Additions based on tax positions of prior years | ​ |  | — | ​ |  | — | ​ |  | 12
Accrued interest | ​ |  | 2 | ​ |  | 2 | ​ |  | 2
Settlements | ​ |  | — | ​ |  | — | ​ |  | (88)
Lapse of statute of limitations | ​ |  | (10) | ​ |  | (3) | ​ |  | (5)
Balance as of December 31 | ​ | $ | 37 | ​ | $ | 40 | ​ | $ | 36

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