12. Income Taxes

Components of the income tax provision applicable to federal, state and foreign income taxes for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	2014			2013			2012
Federal income tax expense (benefit):
Current	$	39,438		$	41,558		$	(512	)
Deferred		39,673			47,136			156,003
		79,111			88,694			155,491
State income tax expense:
Current		3,987			11,733			12,455
Deferred		5,292			4,229			5,483
		9,279			15,962			17,938
Foreign income tax expense (benefit):
Current		4,521			4,572			3,817
Deferred		(1,292	)		(796	)		(1,050	)
		3,229			3,776			2,767
Total income tax expense:
Current		47,946			57,863			15,760
Deferred		43,673			50,569			160,436
Total income tax expense:	$	91,619		$	108,432		$	176,196

The difference between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2014, 2013 and 2012 is summarized as follows:

	2014			2013			2012
Statutory tax rate		35.0	%		35.0	%		35.0	%
State income taxes		2.5			3.7			2.5
Permanent differences		(1.4	)		(1.5	)		(0.2	)
Other, net		(0.1	)		(0.6	)		(0.3	)
Effective tax rate		36.0	%		36.6	%		37.0	%

The Domestic Production Activities Deduction was enacted as part of the American Jobs Creation Act of 2004 (as revised by the Emergency Economic Stabilization Act of 2008) and allows a deduction of 9% in 2010 and thereafter on the lesser of qualified production activities income or taxable income. The permanent difference for 2012 does not include any deduction as it is limited to taxable income and the Company did not have taxable income in 2012 due to the utilization of net operating loss carryforwards. The permanent differences for 2013 include a deduction of $10.0 million as the Company fully utilized its remaining net operating loss carryforwards. The permanent difference for 2014 includes a deduction of $8.8 million.

The tax effect of significant temporary differences representing deferred tax assets and liabilities and changes therein were as follows (in thousands):

	December 31,			Net			December 31,			Net			December 31,			Net			December 31,
	2014			Change			2013			Change			2012			Change			2011
Deferred tax assets:
Current:
Net operating loss carryforwards	$	—		$	(—	)	$	—		$	(18,914	)	$	18,914		$	(95,662	)	$	114,576
Workers’ compensation allowance		28,310			698			27,612			2,534			25,078			1,074			24,004
Other		22,396			2,749			19,647			(804	)		20,451			1,651			18,800
		50,706			3,447			47,259			(17,184	)		64,443			(92,937	)		157,380
Non-current:
Net operating loss carryforwards		12,464			(988	)		13,452			1,690			11,762			(6,672	)		18,434
Expense associated with employee stock options		14,386			(1,822	)		16,208			1,536			14,672			1,944			12,728
Federal benefit of state deferred tax liabilities		24,019			1,181			22,838			816			22,022			1,762			20,260
Other		16,047			1,344			14,703			(421	)		15,124			4,454			10,670
		66,916			(285	)		67,201			3,621			63,580			1,488			62,092
Total deferred tax assets		117,622			3,162			114,460			(13,563	)		128,023			(91,449	)		219,472
Deferred tax liabilities:
Current:
Other		(13,631	)		676			(14,307	)		(2,823	)		(11,484	)		3,171			(14,655	)
Non-current:
Property and equipment basis difference		(986,953	)		(47,359	)		(939,594	)		(33,997	)		(905,597	)		(69,774	)		(835,823	)
Other		(15,623	)		(152	)		(15,471	)		(186	)		(15,285	)		(2,384	)		(12,901	)
		(1,002,576	)		(47,511	)		(955,065	)		(34,183	)		(920,882	)		(72,158	)		(848,724	)
Total deferred tax liabilities		(1,016,207	)		(46,835	)		(969,372	)		(37,006	)		(932,366	)		(68,987	)		(863,379	)
Net deferred tax liability	$	(898,585	)	$	(43,673	)	$	(854,912	)	$	(50,569	)	$	(804,343	)	$	(160,436	)	$	(643,907	)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company expects the deferred tax assets at December 31, 2014 and 2013 to be realized as a result of the reversal of existing taxable temporary differences giving rise to deferred tax liabilities and the generation of taxable income; therefore, no valuation allowance is considered necessary.

Other deferred tax assets consist primarily of the tax effect of various allowance accounts and tax-deferred expenses expected to generate future tax benefits of approximately $38.4 million. Other deferred tax liabilities consist primarily of the tax effect of receivables from insurance companies and tax-deferred income not yet recognized for tax purposes.

For income tax purposes, the Company has approximately $164 million of state net operating losses that can be carried forward as of December 31, 2014. The state net operating losses that can be carried forward, if unused, are scheduled to expire as follows: 2016—$6.8 million; 2025—$630,000; 2026—$16.9 million: 2029—$31.9 million; 2030—$25.7 million; 2031—$82.5 million.

As of December 31, 2014, the Company had no unrecognized tax benefits. The Company has established a policy to account for interest and penalties related to uncertain income tax positions as operating expenses. As of December 31, 2014, the tax years ended December 31, 2011 through December 31, 2013 are open for examination by U.S. taxing authorities. As of December 31, 2014, the tax years ended December 31, 2010 through December 31, 2013 are open for examination by Canadian taxing authorities.

On January 1, 2010, the Company converted its Canadian operations from a Canadian branch to a controlled foreign corporation for federal income tax purposes. Because the statutory tax rates in Canada are lower than those in the United States, this transaction triggered a $5.1 million reduction in deferred tax liabilities, which is being amortized as a reduction to deferred income tax expense over the weighted average remaining useful life of the Canadian assets.

As a result of the above conversion, the Company’s Canadian assets are no longer directly subject to United States taxation, provided that the related unremitted earnings are permanently reinvested in Canada. Effective January 1, 2010, the Company has elected to permanently reinvest these unremitted earnings in Canada, and intends to do so for the foreseeable future. As a result, no deferred United States federal or state income taxes have been provided on such unremitted foreign earnings, which totaled approximately $47.5 million as of December 31, 2014. The unrecognized deferred tax liability associated with these earnings was approximately $7.2 million, net of available foreign tax credits. This liability would be recognized if the Company received a dividend of the unremitted earnings.