. INCOME TAXES

Earnings before income taxes for the years ended December 31 consist of:



(In thousands)	2016		2015		2014
Domestic	$	154,571	$	135,112	$	120,563
Foreign	113,390		140,082		126,381
	$	267,961	$	275,194	$	246,944

The provision for income taxes for the years ended December 31 consists of:



(In thousands)	2016			2015			2014
Current:
Federal	$	45,523		$	(6,741	)	$	70,609
State	8,002			6,175			9,065
Foreign	20,861			27,134			33,401
Total current	74,386			26,568			113,075

Deferred:
Federal	4,267			49,060			(29,683		)
State	73			7,390			(1,247		)
Foreign	(147		)	(72		)	(5,150		)
Total deferred	4,193			56,378			(36,080		)
Provision for income taxes	$	78,579		$	82,946		$	76,995

The effective tax rate varies from the U.S. federal statutory tax rate for the years ended December 31, principally:



	2016		2015		2014
U.S. federal statutory tax rate	35.0	%	35.0	%	35.0	%
Add (deduct):
State and local taxes, net of federal benefit	1.1		4.3		2.4
R&D tax credits	(0.9	)	(1.3	)	(1.3	)
Foreign earnings ⁽¹⁾	(5.8	)	(6.2	)	(4.4	)
All other, net	(0.1	)	(1.7	)	(0.5	)
Effective tax rate	29.3	%	30.1	%	31.2	%

⁽¹⁾ Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S. Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances.

The components of the Corporation’s deferred tax assets and liabilities at December 31 are as follows:



(In thousands)	2016		2015
Deferred tax assets:
Pension plans	$	45,568	$	40,102
Environmental reserves	9,871		9,561
Inventories	21,758		20,041
Postretirement/postemployment benefits	13,542		13,272
Incentive compensation	9,425		12,369
Net operating loss	10,345		9,043
Capital loss carryover	11,352		10,141
Other	39,977		38,226
Total deferred tax assets	161,838		152,755
Deferred tax liabilities:
Depreciation	25,963		29,771
Goodwill amortization	97,667		89,276
Other intangible amortization	51,712		54,017
Other	16,225		12,280
Total deferred tax liabilities	191,567		185,344
Valuation allowance	17,776		17,895
Net deferred tax liabilities	$	47,505	$	50,484

Deferred tax assets and liabilities are reflected on the Corporation’s consolidated balance sheet at December 31 as follows:



(In thousands)	2016		2015
Net noncurrent deferred tax assets	2,217		3,963
Net noncurrent deferred tax liabilities	49,722		54,447
Net deferred tax liabilities	$	47,505	$	50,484

The Corporation has income tax net operating loss carryforwards related to international operations of approximately $24.0 million of which $13.0 million have an indefinite life and $11.0 million expire through 2023. The Corporation has federal and state income tax net loss carryforwards of approximately $97.6 million, of which $66.5 million are net operating losses which expire through 2036 and $31.1 million are capital loss carryforwards which expire in 2020. The Corporation has recorded a deferred tax asset of $21.7 million reflecting the benefit of the loss carryforwards.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2016 in certain of the Corporation’s foreign locations. Such objective evidence limits the ability to consider other subjective evidence such as projections for future growth. The Corporation decreased its valuation allowance by $0.1 million to $17.8 million, as of December 31, 2016, in order to measure only the portion of the deferred tax asset that more likely than not will be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth.

Income tax payments, net of refunds, of $54.5 million, $4.9 million, and $35.0 million were made in 2016, 2015, and 2014, respectively.

The amount of undistributed foreign subsidiaries earnings considered to be permanently reinvested for which no provision has been made for U.S. federal or foreign taxes at December 31, 2016 was $283.5 million. It is not practicable to estimate the amount of tax that would be payable if these amounts were repatriated to the United States; however, foreign tax credits may partiality offset any tax liability.

The Corporation has recognized a liability in Other liabilities for interest of $1.8 million and penalties of $1.4 million as of December 31, 2016.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



(In thousands)	2016			2015			2014
Balance at January 1,	$	12,414		$	11,560		$	10,623
Additions for tax positions of prior periods	32			359			1,421
Reductions for tax positions of prior periods	(1,679		)	—			—
Additions for tax positions related to the current year	789			2,026			1,738
Settlements	(102		)	(1,414		)	(2,039		)
Lapses of statute of limitations	—			—			(41		)
Foreign currency translation	—			(117		)	(142		)
Balance at December 31,	$	11,454		$	12,414		$	11,560

In many cases the Corporation’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities.

The following describes the open tax years, by major tax jurisdiction, as of December 31, 2016:



United States (Federal)	2013	-	present
United States (Various states)	2005	-	present
United Kingdom	2009	-	present
Canada	2010	-	present

The Corporation does not expect any significant changes to the estimated amount of liability associated with its uncertain tax positions through the next twelve months. Included in the total unrecognized tax benefits at December 31, 2016, 2015, and 2014 is $7.7 million, $8.3 million, and $8.0 million, respectively, which if recognized, would favorably affect the effective income tax rate.