The top tax rate that U.S. companies would pay on an estimated $3.1 trillion in earnings they’ve stockpiled overseas crept up to 15.5 percent in the final version of the GOP tax bill released Friday.

President Donald Trump had initially called for a top rate around 10 percent for companies’ offshore profits, but as GOP lawmakers searched for revenue to offset the cost of other tax cuts, one of the sources they settled on was multinationals’ offshore cash.

Under the GOP tax plan that’s headed for votes in the House and Senate next week, earnings that companies hold offshore as cash and cash equivalents would be taxed at 15.5 percent. Income invested in less-liquid assets—including plants and equipment—would be taxed at 8 percent. Both taxes would be mandatory, not optional.

A gate protects Wall Street near the New York Stock Exchange
A gate protects Wall Street near the New York Stock Exchange Bloomberg News

Multinationals “will scream” about the higher rate for cash, said Michael Mundaca, co-leader of the Ernst & Young Americas Tax Center and a former top Treasury tax official. Companies will immediately began looking for ways to get their cash into the lower, 8 percent bucket, he said, though “that’s also high.”

Setting the rates at those levels would generate about $40 billion more than if the rates were 14.5 percent and 7.5 percent, as proposed in the Senate bill that was approved Dec. 2.

Under current law, companies can defer paying U.S. income taxes on their foreign earnings at the corporate rate of 35 percent until they return, or “repatriate,” them to the U.S. The deferral provision has led companies to stockpile those earnings overseas.

Republicans say the “deemed repatriation” tax imposed by the GOP bill would clear the way for many of those companies to bring their earnings back to the U.S.

Bloomberg News