PalacioHill

Only the portion of the expenses that need to be met by the portfolio need to be bumped up by the portfolio tax rate in order to figure out the after-tax return requirement.
Think of it like this: You are already taking taxes out of his salary. Expenses are first paid by his salary, then he uses his portfolio to cover the deficit. So only the portion of the expenses paid by the portfolio need to be bumped up by the portfolio tax rate.