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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Components of Income Before Income Taxes | The components of Income before income taxes are as follows for the years ended December 31:
|  | 2021 |  | 2020 |  | 2019
United States |  | $ | 1,256 |  |  | $ | 1,317 |  |  | $ | 1,050 |
International |  | 1,831 |  |  | 2,330 |  |  | 2,251 |
Total Income before income taxes |  | $ | 3,087 |  |  | $ | 3,647 |  |  | $ | 3,301 |
Provision for Income Taxes | The Provision for income taxes consists of the following for the years ended December 31:
|  | 2021 |  | 2020 |  | 2019
United States |  | $ | 228 |  |  | $ | 259 |  |  | $ | 180 |
International |  | 521 |  |  | 528 |  |  | 594 |
Total Provision for income taxes |  | $ | 749 |  |  | $ | 787 |  |  | $ | 774 |
Schedule of Components of Deferred Income Tax Benefit | Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in the current provision for taxes being higher (lower) than the total provision for income taxes as follows:
|  | 2021 |  | 2020 |  | 2019
Goodwill and intangible assets |  | $ | 50 |  |  | $ | 1 |  |  | $ | 34 |
Property, plant and equipment |  | (19) |  |  | 12 |  |  | 12 |
Pension and other retiree benefits |  | (4) |  |  | 10 |  |  | (13) |
Stock-based compensation |  | 11 |  |  | (7) |  |  | (1) |
Right-of-use assets/lease liabilities |  | (2) |  |  | (1) |  |  | — |
Tax credits and tax loss carryforwards |  | (2) |  |  | (1) |  |  | 3 |
Deferred withholding tax |  | (16) |  |  | 111 |  |  | (21) |
Other, net |  | 19 |  |  | 18 |  |  | (33) |
Total deferred tax benefit (provision) |  | $ | 37 |  |  | $ | 143 |  |  | $ | (19) |
Effective Tax Rate Reconciliation | The difference between the statutory U.S. federal income tax rate and the Company’s global effective tax rate as reflected in the Consolidated Statements of Income is as follows:
|  | 2021 |  | 2020 |  | 2019
Percentage of Income before income taxes |  |  |  |  |  |
Tax at United States statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit |  | 1.1 |  |  | 1.0 |  |  | 0.6 |
Earnings taxed at other than United States statutory rate |  | 2.7 |  |  | 3.3 |  |  | 4.6 |
Benefit for foreign tax matters(1) |  | — |  |  | (2.0) |  |  | (0.9) |
Non-deductible goodwill impairment charges |  | 2.2 |  |  | — |  |  | — |
Foreign-derived intangible income benefit |  | (2.2) |  |  | (1.6) |  |  | (1.3) |
Other, net |  | (0.5) |  |  | (0.1) |  |  | (0.6) |
Effective tax rate |  | 24.3 | % |  | 21.6 | % |  | 23.4 | %
_________ (1)In 2020, the provision for income taxes includes $71 of income tax benefits recorded on a discrete period basis, of which $45 relates to previously recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax asset. As part of a previously recorded charge for the Tax Cuts and Jobs Act of 2017 (the “TCJA”), the Company has provided for foreign withholding taxes expected to be paid on the remittance of earnings from certain overseas subsidiaries no longer deemed indefinitely reinvested. As a result of a recent reorganization of the ownership structure of certain foreign subsidiaries, the Company determined that no withholding taxes will be due on the remittance by certain subsidiaries of earnings previously deemed reinvested and, accordingly, reversed $45 of previously recorded foreign withholding taxes. Also as part of the previously recorded charge for the TCJA, the Company provided a valuation allowance against a deferred tax asset related to the foreign tax credit carryforwards that the Company did not expect to be able to use due to changes made by the TCJA. As a result of a new operating structure being implemented within one of the Company’s divisions, the Company believes the use of these foreign tax credit carryforwards will not be limited in the future and, accordingly, reversed the previously recorded valuation allowance of $26. In 2019, the provision for income taxes includes a net benefit of $29 related to changes enacted by the Swiss government to its corporate tax regime, which included, among other items, the repeal of certain preferential tax regimes and an increase to the cantonal tax rate for future periods. Additionally, the government provided transition rules which allowed companies to record goodwill for tax purposes, partially offsetting the impact on cash taxes of the higher cantonal rate over the next ten years.
Components of Deferred Tax Assets (Liabilities) | The components of deferred tax assets (liabilities) are as follows at December 31:
|  | 2021 |  | 2020
Deferred tax liabilities: |  |  |  |
Goodwill and intangible assets |  | $ | (523) |  |  | $ | (603) |
Property, plant and equipment |  | (301) |  |  | (281) |
Right-of-use assets |  | (125) |  |  | (131) |
Deferred withholding tax |  | (111) |  |  | (95) |
Other |  | (35) |  |  | (52) |
Total deferred tax liabilities |  | (1,095) |  |  | (1,162) |
Deferred tax assets: |  |  |  |
Pension and other retiree benefits |  | 344 |  |  | 404 |
Tax credits and tax loss carryforwards |  | 152 |  |  | 127 |
Lease liabilities |  | 138 |  |  | 144 |
Accrued liabilities |  | 234 |  |  | 250 |
Stock-based compensation |  | 76 |  |  | 73 |
Other |  | 69 |  |  | 125 |
Total deferred tax assets |  | 1,013 |  |  | 1,123 |
Valuation Allowance |  | $ | (120) |  |  | $ | (96) |
Net deferred tax assets |  | $ | 893 |  |  | $ | 1,027 |
Net deferred income taxes |  | $ | (202) |  |  | $ | (135) |
Unrecognized Tax Benefits Activity | Unrecognized tax benefits activity for the years ended December 31, 2021, 2020 and 2019 is summarized below:
|  | 2021 |  | 2020 |  | 2019
Unrecognized tax benefits: |  |  |  |  |  |
Balance, January 1 |  | $ | 227 |  |  | $ | 173 |  |  | $ | 190 |
Increases as a result of tax positions taken during the current year |  | 26 |  |  | 18 |  |  | 14 |
Decreases of tax positions taken during prior years |  | (20) |  |  | (5) |  |  | (21) |
Increases of tax positions taken during prior years |  | 40 |  |  | 57 |  |  | 20 |
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations |  | (23) |  |  | (19) |  |  | (30) |
Effect of foreign currency rate movements |  | (5) |  |  | 3 |  |  | — |
Balance, December 31 |  | $ | 245 |  |  | $ | 227 |  |  | $ | 173 |

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