5. Other income (expense) 6. Income taxes Reconciliation of the U.S. federal statutory rate to effective rate: $^{1}$ Excludes amounts included in valuation allowances and mandatory deemed repatriation of non-U.S. earnings. $^{2}$ Portion of Surface Mining & Technology goodwill impairment not deductible for tax purposes. See Note 10 for further discussion. Included in the line item above labeled "Non-U.S. subsidiaries taxed at other than the U.S. rate" are the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax and U.S. GAAP results. Although not individually significant by jurisdiction, pre-tax permanent 93 1 Includes gains (losses) from foreign exchange derivative contracts. See Note 4 for further details. 2 Includes pretax gain of $85 million related to the sale of Caterpillar's equity interest in Iron Planet Holdings Inc. $^{3}$ Beginning January 1, 2018, the unrealized gains and losses arising from the revaluation of equity securities are included in Other income (expense) in Statement 1. See Note 1J for additional information. Table of Contents Years ended December 31, (Millions of dollars) 2018 2017 2016 Investment and interest income $ 195 $ 122 $ 74 Foreign exchange gains (losses)  1  (201) (213) (57) License fee income 125 100 92 Gains (losses) on sale of securities and affiliated companies 4 187 $^{2}$  47 Net periodic pension and OPEB income (cost), excluding service cost (118) (54) (664) Gains (losses) on equity securities measured at fair value 3 (33) — — Miscellaneous income (loss) (39) 11 (10) Total $ (67) $ 153 $ (518) Years ended December 31, (Millions of dollars) 2018 2017 2016 Taxes at U.S. statutory rate $ 1,643 21.0 % $ 1,429 35.0 % $ 49 35.0 % (Decreases) increases resulting from: Non-U.S. subsidiaries taxed at other than the U.S. rate 282 3.6 % (282) (6.9)% (119) (85.6)% State and local taxes, net of federal  1 22 0.3 % 27 0.7 % (1) (0.7)% Interest and penalties, net of tax 33 0.4 % 28 0.7 % 24 17.2 % U.S. tax incentives (106) (1.3)% (52) (1.3)% (52) (37.4)% ESOP dividend tax benefit (12) (0.2)% (21) (0.5)% (27) (19.4)% Net excess tax benefits from stock-based compensation (56) (0.7)% (64) (1.6)% — — % U.S. deferred tax rate change (154) (2.0)% 596 14.6 % — — % Mandatory deemed repatriation of non-U.S. earnings 50 0.7 % 1,775 43.5 % — — % Valuation allowances (29) (0.4)% (111) (2.7)% 141 101.4 % Nondeductible goodwill  2 — — % — — % 191 137.4 % Other—net 25 0.3 % 14 0.3 % (14) (10.1)% Provision (benefit) for income taxes $ 1,698 21.7 % $ 3,339 81.8 % $ 192 137.8 %