imposed on interest earnings. Generally taxes are imposed on nominal interest earnings, not adjusted for inflation. If the tax rate is denoted as t, the before-tax nominal earning rate is i, the amount of taxes paid (per dollar or other unit invested) is i × t, and so the after-tax nominal earning is i × (1-t ). Hence the expected after-tax real return to the investor, using the simplified approximate Fisher equation above, is given by

:Expected real after-tax return =

Variations in inflation

The inflation rate

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