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Income Taxes (Tables)

12 Months Ended

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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