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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Source of pre-tax income and components of income tax expense | The source of pre-tax income and the components of income tax expense are as follows:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Income (loss) components: |  |  |  |  |
Domestic | $ | 45 |  |  | $ | (33) |  |  | $ | 203 |
Foreign | 466 |  |  | 318 |  |  | 213 |
Total pre-tax income | $ | 511 |  |  | $ | 285 |  |  | $ | 416 |
Income tax expense components: |  |  |  |  |
Current: |  |  |  |  |
Domestic – federal | $ | 16 |  |  | $ | 24 |  |  | $ | 39 |
Domestic – state and local | 5 |  |  | 5 |  |  | 13 |
Foreign | 53 |  |  | 33 |  |  | 40 |
Total Current | 74 |  |  | 62 |  |  | 92 |
Deferred: |  |  |  |  |
Domestic – federal | $ | (2) |  |  | $ | (21) |  |  | $ | 7 |
Domestic – state and local | — |  |  | (8) |  |  | (1) |
Foreign | 12 |  |  | (2) |  |  | (83) |
Total Deferred | 10 |  |  | (31) |  |  | (77) |
Total income tax provision | $ | 84 |  |  | $ | 31 |  |  | $ | 15 |
Effective income tax rate | 16.3 | % |  | 10.9 | % |  | 3.7 | %
Schedule of effective income tax rate reconciliation | Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings before income taxes are as follows:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Tax provision at U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in tax rate resulting from: |  |  |  |  |
State income taxes | 0.8 |  |  | 0.7 |  |  | 2.7 |
Uncertain tax positions | (0.1) |  |  | (3.9) |  |  | 0.4 |
Valuation allowance | 0.9 |  |  | 0.5 |  |  | 1.2 |
Net interest deductions | (2.4) |  |  | (4.5) |  |  | (3.0) |
Foreign income taxed at different rates | (0.2) |  |  | (0.9) |  |  | 0.7 |
US tax on foreign earnings | 2.2 |  |  | 5.3 |  |  | 1.6 |
Tax incentives | (5.5) |  |  | (7.4) |  |  | (9.6) |
Rate change | 0.9 |  |  | (1.3) |  |  | (18.1) |
Goodwill impairment | — |  |  | 2.9 |  |  | 7.8 |
Federal R&D tax credit | (0.7) |  |  | (1.3) |  |  | (1.2) |
Stock compensation | (0.6) |  |  | (2.4) |  |  | (1.5) |
Other—net | — |  |  | 2.2 |  |  | 1.7 |
Effective income tax rate | 16.3 | % |  | 10.9 | % |  | 3.7 | %
Components of net deferred tax assets and liabilities | The following is a summary of the components of the net deferred tax assets and liabilities recognized in the Consolidated Balance Sheets:
| December 31,
(in millions) | 2021 |  | 2020
Deferred tax assets: |  |  |
Employee benefits | $ | 111 |  |  | $ | 127 |
Accrued expenses | 35 |  |  | 35 |
Loss and other tax credit carryforwards | 250 |  |  | 270 |
Inventory | 6 |  |  | 6 |
Lease Liabilities | 70 |  |  | 64 |
Other | 8 |  |  | 41 |
| 480 |  |  | 543 |
Valuation allowance | (201) |  |  | (217) |
Net deferred tax asset | $ | 279 |  |  | $ | 326 |
Deferred tax liabilities: |  |  |
Intangibles | $ | 155 |  |  | $ | 138 |
Investment in foreign subsidiaries | 4 |  |  | 5 |
Property, plant and equipment | 77 |  |  | 77 |
Lease right-of-use assets | 69 |  |  | 62 |
Other | 35 |  |  | 30 |
Total deferred tax liabilities | $ | 340 |  |  | $ | 312 |
Reconciliation of Deferred Tax Asset Valuation Allowance | A reconciliation of the change in valuation allowance on deferred tax assets is as follows:
(in millions) | 2021 |  | 2020 |  | 2019
Valuation allowance — January 1 | $ | 217 |  |  | $ | 191 |  |  | $ | 234 |
Change in assessment (a) | — |  |  | 1 |  |  | (2) |
Current year operations | 4 |  |  | 4 |  |  | 3 |
Other comprehensive income | (4) |  |  | 3 |  |  | (1) |
Foreign currency and other (b) | (16) |  |  | 18 |  |  | (43) |
Valuation allowance — December 31 | $ | 201 |  |  | $ | 217 |  |  | $ | 191 |
(a) Increase in assessment in 2020 is primarily attributable to loss positions in various jurisdictions. Decrease in assessment in 2019 is primarily attributable to profitability of certain jurisdictions. (b) Included in foreign currency and other in 2019 is a decrease in net operating losses due primarily to the liquidation of a foreign subsidiary for which a valuation allowance was maintained.
Deferred taxes classification | Deferred taxes are classified in the Consolidated Balance Sheets as follows:
| December 31,
(in millions) | 2021 |  | 2020
Non-current assets | $ | 226 |  |  | $ | 256 |
Non-current liabilities | (287) |  |  | (242) |
Total net deferred tax liabilities | $ | (61) |  |  | $ | 14 |
Tax attributes available to reduce future taxable income | Tax attributes available to reduce future taxable income begin to expire as follows:
(in millions) | December 31, 2021 |  | First Year of Expiration
U.S. net operating loss | $ | 6 |  |  | December 31, 2025
State net operating loss | 101 |  |  | December 31, 2024
State excess interest expense | 17 |  |  | Indefinite
State tax credits | 1 |  |  | Indefinite
Foreign net operating loss | 1,068 |  |  | December 31, 2022
Foreign tax credits | 4 |  |  | December 31, 2030
Reconciliation of the beginning and ending amount of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) | 2021 |  | 2020 |  | 2019
Unrecognized tax benefits — January 1 | $ | 114 |  |  | $ | 129 |  |  | $ | 136 |
Gross Increases - Current year tax positions | — |  |  | — |  |  | 3 |
Gross Increases - Prior year tax positions | — |  |  | — |  |  | — |
Gross Decreases - Prior year tax positions | (1) |  |  | (3) |  |  | (5) |
Settlements | — |  |  | (12) |  |  | (5) |
Lapse of Statute of Limitations | (1) |  |  | — |  |  | — |
Currency Translation Adjustment | (1) |  |  | — |  |  | — |
Unrecognized tax benefits — December 31 | $ | 111 |  |  | $ | 114 |  |  | $ | 129 |
Earliest open tax years by major jurisdiction | The following table summarizes our earliest open tax years by major jurisdiction:
Jurisdiction |  | Earliest Open Year
Italy |  | 2015
Luxembourg |  | 2017
Sweden |  | 2013
Germany |  | 2012
United Kingdom |  | 2015
United States |  | 2017
Switzerland |  | 2019

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