Unit 1 DQ: Taxes and Treasury Bills DQ Question: As a practical matter, most of the return you earn from investing in Treasury bills are taxed right away as ordinary income. Thus, if you are in the 40 percent tax bracket and you earn 5 percent on a Treasury bill, your after-tax return is 5%*(1-0.4) = 3%. In other words, 40 percent of your return goes to pay taxes, leaving you with just 3 percent. Once you consider inflation and taxes, how does the long-term return from Treasury bills look? 10 points