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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes On December 22, 2017, the United States enacted the Tax Act, which made broad changes to the tax code including a reduction of the United States federal corporate income tax rate from 35% to 21% effective January 1, 2018 as well as a transition to a Territorial Tax regime. Due to the timing and complexity of the Tax Act, we recorded provisional amounts based on reasonable estimates for the year ended and as of December 31, 2017. As allowed by the Securities and Exchange Commission, we revised our provisional amounts based on new guidance and additional analysis during a measurement period of one year from the enactment date ("one-year measurement period"). Our accounting for the effects of the Tax Act was completed in the fourth quarter of 2018. The key provisions of the Tax Act and their related impacts, including the impact during the one-year measurement period, are as follows:
• | As a result of the Tax Act, the deferred tax liability previously recorded for non-United States earnings that were not permanently invested was reduced with a corresponding benefit to tax expense for the year ended December 31, 2017 of $275.8. This was comprised of the deferred tax liability recorded as of December 22, 2017, offset by $5.5 tax expense related to non-United States withholding tax. During the one-year measurement period, we increased the deferred tax liability by $9.2 due to non-United States withholding and other taxes provided on non-United States prior-year earnings that may be remitted.
• | As part of the transition to a Territorial Tax regime, a tax was imposed on our unremitted post-1986 non-United States earnings. In 2017, we estimated and recorded a transition tax expense of $170.2. During the one-year measurement period, the Transition tax recorded was reduced by a net $6.0 during the year ended December 31, 2018.
• | The impact of the Tax Act on our deferred tax assets and liabilities balance, excluding the provision for unremitted earnings, was a tax expense of $1.2. This amount remained unchanged during the year ended December 31, 2018.
• | The Tax Act created a new Global Intangible Low-Taxed Income (“GILTI”) tax regime. Under GILTI, income earned after December 31, 2017 by certain non-United States subsidiaries may be included currently in the gross income of the United States parent company. We made a policy decision to treat GILTI taxes as a current period expense.
The provision for income taxes was as follows:
Year Ended December 31 | 2018 |  | 2017 |  | 2016 |
Current |  |  |
United States |  |  |
Federal |  | $17.2 |  |  | $211.7 |  |  | $35.6 |
State | 10.8 |  | 8.4 |  | 4.0 |
Non-United States | 181.9 |  | 168.6 |  | 144.0 |
Total current | 209.9 |  | 388.7 |  | 183.6 |
Deferred |  |  |
United States |  |  |
Federal | (7.5 | ) | (178.2 | ) | 69.7 |
State | 1.0 |  | (0.8 | ) | 0.5 |
Non-United States | (5.4 | ) | (17.8 | ) | 3.8 |
Total deferred | (11.9 | ) | (196.8 | ) | 74.0 |
Total provision |  | $198.0 |  |  | $191.9 |  |  | $257.6 |
A tax reconciliation between taxes computed at the United States federal statutory rate of 21% for 2018 and 35% for 2017 and 2016 and the consolidated effective tax rate is as follows:
Year Ended December 31 | 2018 |  | 2017 |  | 2016 |
Income tax based on statutory rate |  | $158.5 |  |  | $258.1 |  |  | $245.5 |
Increase (decrease) resulting from: |  |  |
Non-United States tax rate difference: |  |  |
French business tax(1) | 59.1 |  | 46.9 |  | 41.0 |
French CICE(2) | (39.9 | ) | (77.1 | ) | — |
Other(1)(2) | 20.0 |  | (28.6 | ) | (23.5 | )
Repatriation of non-United States earnings(2)(3) | 2.5 |  | 69.7 |  | (10.5 | )
State income taxes, net of federal benefit | 8.2 |  | 1.1 |  | 2.2 |
Change in valuation allowance | 0.7 |  | (6.9 | ) | (6.0 | )
Work Opportunity Tax Credit | (8.8 | ) | (10.5 | ) | (11.0 | )
Foreign-Derived Intangible Income deduction | (12.5 | ) | — |  | — |
United States Tax Act and French tax reform(3) | 3.2 |  | (73.7 | ) | — |
Other, net | 7.0 |  | 12.9 |  | 19.9 |
Tax provision |  | $198.0 |  |  | $191.9 |  |  | $257.6 |
(1) The French business tax is allowed as a deduction for French income tax purposes. The gross amount of the French business tax was $74.8, $72.1 and $63.1 for 2018, 2017 and 2016, respectively. The amounts in the table above of $59.1, $46.9 and $41.0 for 2018, 2017 and 2016, respectively, represent the French business tax expense net of the French tax benefit using the United States federal rate of 21% for 2018 and 35% for 2017 and 2016. Included in Other Non-United States tax rate differences are a benefit of $10.1 for 2018 and an expense of $0.4 for both 2017 and 2016 related to the difference between the United States federal rate and the French tax rate applied to the respective gross amounts of the French business tax. (2) The French CICE was a payroll tax credit that was tax-free for French tax purposes and increased French earnings. The amounts in the table above of $39.9 and $77.1 for 2018 and 2017, respectively, represent the French tax benefits using the United States federal rate of 21% for 2018 and 35% for 2017. Included in Other Non-United States tax rate differences are a benefit of $25.5 for 2018 and an expense of $1.3 for 2017 related to the difference between the United States federal rate and French tax rate applied to the respective gross French CICE amounts. The French tax benefits related to the CICE were $58.9 for 2016. Prior to the Tax Act, this increase in French earnings resulted in a United States tax expense as these French earnings were deemed to be not permanently invested, which was included in Repatriation of non-United States earnings. Included in Other Non-United States tax rate differences were benefits of $2.4 and $1.8 for 2017 and 2016, respectively, that related to French earnings that were deemed to be permanently invested. (3) Prior to the enactment of the Tax Act on December 22, 2017, we recorded $83.3 of tax expense in 2017 related to non-United States earnings that were deemed to be not permanently invested. This amount was included in the Repatriation of non-United States earnings consistent with prior years. As a result of the Tax Act, this $83.3 was reversed as we were no longer recording United States federal income tax expense on these earnings, and this tax benefit was included in the United States Tax Act and French tax reform benefit of $73.7. Deferred income taxes are recorded based on temporary differences at the tax rate expected to be in effect when the temporary differences reverse. The Tax Act significantly impacted our deferred income taxes. Temporary differences, which give rise to the deferred taxes, are as follows:
December 31 | 2018 |  | 2017 |
Future Income Tax Benefits (Expense) |  |
Accrued payroll taxes and insurance |  | $13.8 |  |  | $17.3 |
Employee compensation payable | 17.8 |  | 20.2 |
Pension and postretirement benefits | 46.9 |  | 49.0 |
Intangible assets | (102.1 | ) | (103.0 | )
Repatriation of non-United States earnings | (15.3 | ) | (5.5 | )
Loans denominated in foreign currencies | (19.6 | ) | (13.5 | )
Net operating losses | 100.5 |  | 104.1 |
Other | 97.4 |  | 77.6 |
Valuation allowance | (72.4 | ) | (77.5 | )
Total future tax benefits |  | $67.0 |  |  | $68.7 |
Deferred tax asset |  | $99.3 |  |  | $101.0 |
Deferred tax liability | (32.3 | ) | (32.3 | )
Total future tax benefits |  | $67.0 |  |  | $68.7 |
Pre-tax earnings of non-United States operations were $551.0, $514.9 and $482.2 in 2018, 2017 and 2016, respectively. We have not provided deferred taxes on $292.5 of unremitted earnings of non-United States subsidiaries that are considered permanently invested. As of December 31, 2018, deferred taxes for non-United States withholding and other taxes were provided on $1,729.3 of unremitted earnings of non-United States subsidiaries that may be remitted to the United States. As of December 31, 2018 and 2017, we have recorded a deferred tax liability of $15.3 and $5.5, respectively, related to these non-United States earnings that may be remitted. We had United States federal and non-United States net operating loss carryforwards and United States state net operating loss carryforwards totaling $410.1 and $174.6, respectively, as of December 31, 2018. The net operating loss carryforwards expire as follows:
| United States Federal and Non-United States |  | United States State |
2019 |  | $6.1 |  |  | $3.9 |
2020 | 3.1 |  | 0.2 |
2021 | 5.3 |  | 3.7 |
2022 | 4.5 |  | 4.0 |
2023 | 1.9 |  | 9.6 |
Thereafter | 22.2 |  | 153.2 |
No expirations | 367.0 |  | — |
Total net operating loss carryforwards |  | $410.1 |  |  | $174.6 |
We have recorded a deferred tax asset of $100.5 as of December 31, 2018, for the benefit of these net operating losses. Realization of this asset is dependent on generating sufficient taxable income prior to the expiration of the loss carryforwards. A related valuation allowance of $66.3 was recorded as of December 31, 2018, as management believed that realization of certain net operating loss carryforwards is unlikely. As of December 31, 2018, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $34.2 that would favorably affect the effective tax rate if recognized. During 2018, we settled non-United States tax litigation unfavorably, resulting in a reduction to our unrecognized tax benefits of $42.4 with minimal impact to the tax provision. We do not expect our unrecognized tax benefits to change significantly over the next year. As of December 31, 2017, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $66.5. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. In 2018, we recognized a reduction of interest and penalties due to the aforementioned tax litigation of $18.4. We accrued net interest and penalties of $0.2 and $0.3 in 2017 and in 2016, respectively. The following table summarizes the activity related to our unrecognized tax benefits during 2018, 2017 and 2016:
| 2018 |  | 2017 |  | 2016 |
Gross unrecognized tax benefits, beginning of year |  | $46.1 |  |  | $23.8 |  |  | $19.0 |
Increases in prior year tax positions | 11.4 |  | 27.1 |  | 4.1 |
Decreases in prior year tax positions | (1.8 | ) | (1.2 | ) | (1.7 | )
Increases for current year tax positions | 5.9 |  | 6.6 |  | 4.1 |
Expiration of statute of limitations and audit settlements | (29.4 | ) | (10.2 | ) | (1.7 | )
Gross unrecognized tax benefits, end of year |  | $32.2 |  |  | $46.1 |  |  | $23.8 |
Potential interest and penalties | 2.0 |  | 20.4 |  | 20.2 |
Balance, end of year |  | $34.2 |  |  | $66.5 |  |  | $44.0 |
We conduct business globally in various countries and territories. We are routinely audited by the tax authorities of the various tax jurisdictions in which we operate. Generally, the tax years that could be subject to examination are 2011 through 2018 for our major operations in France, Germany, Japan, the United Kingdom and the United States. As of December 31, 2018, we were subject to tax audits in Austria, Canada, Denmark, France, Germany, and the United States. We believe that the resolution of these audits will not have a material impact on earnings.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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