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Income Taxes
 9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Income Tax Rate and Income Tax Provision
On December 22, 2017, the TCJA was enacted into law. TCJA significantly changes existing U.S. tax law and includes numerous provisions that affect our business such as imposing a one-time transition tax on deemed repatriation of deferred foreign income ("Transition Tax"), reducing the U.S. federal statutory tax rate, and adopting a territorial tax system. The TCJA includes a provision to tax global intangible low-taxed income (“GILTI”), thereby requiring us to include in our U.S income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The GILTI provision is complex and subject to continuing regulatory interpretation by the U.S. Internal Revenue Service (“IRS”). We are required to make an accounting policy election to either (1) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factor such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). We have elected to recognize the GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period.

For interim tax reporting, we estimate one annual effective tax rate for tax jurisdictions not subject to a valuation allowance and apply that rate to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.
Our effective income tax rate was 22.3% and 27.9% for the three and nine months ended September 30, 2019, respectively. In comparison to the U.S. statutory rate of 21.0%, the Company's effective income tax rate for the three month period ended September 30, 2019, is positively impacted by the benefits of U.S. Research and Development credits for current and prior periods and is negatively impacted by foreign earnings taxed at a higher rate, the effect of GILTI and other foreign income inclusions in the U.S. tax base, a U.S. audit assessment related to the valuation of an Intellectual Property transfer in 2011, state income taxes and non-deductible expenses. For the nine month period ended September 30, 2019, the Company's effective income tax rate is negatively impacted by foreign earnings taxed at a higher rate, the effect of GILTI and other foreign income inclusions in the U.S. tax base, U.S. audit assessments associated with 2011 and 2012 transactions, state income taxes and non-deductible expenses. For the nine month period ended September 30, 2019, the Company's effective income tax rate is positively impacted by the benefits for the U.S. Research and Development credit for current and prior periods and the release of valuation allowance on foreign deferred assets in Brazil related to improved profitability from Reinvent SEE initiatives.
Our effective income tax rate was 30.6% and 114.5% for the three and nine months ended September 30, 2018, respectively. In comparison to the U.S. statutory rate of 21.0%, the Company’s effective tax rate was negatively impacted by the Transition Tax and GILTI provisions associated with the TCJA, withholding taxes, non-deductible expenses and state income taxes, offset by the benefits from lapses in statute of limitations on foreign unrecognized tax benefits.
The decrease in valuation allowances for the nine months ended September 30, 2019 was $8.1 million. The decrease in valuation allowances for the three months ended September 30, 2019 was not material. The change in valuation allowances for the three and nine months ended September 30, 2018 was not material.
We reported a net increase in unrecognized tax benefits in the three and nine months ended September 30, 2019 of $16.7 million and $26.4 million, respectively, primarily related to U.S. audit assessments and interest accruals on existing positions. We reported changes in unrecognized tax benefits in the three and nine months ended September 30, 2018 of a $2.0 million increase and a $12.0 million decrease, respectively, primarily related to interest accruals and statute of limitations lapses in foreign jurisdictions. Interest and penalties on tax assessments are included in income tax expense.