I'll give an example/analogy. Jenny is a waitress in a cocktail bar, earning very modest wages. She shares an apartment with her roommate, and does her best to contribute to her Roth IRA. One day, Jenny's rich uncle Rufus dies, and leaves to her $10M. Jenny puts the $10M into the Vanguard S&P 500 index fund. The calendar rolls over, and now it's tax-season in the following year. Vanguard sends to Jenny a 1099R, showing that hey, over the months that she's had that account, it has generated $100K in taxable dividends. Now she needs to scramble to pay her tax bill... take extra hours at the bar, maybe get a second job... except that those extra hours or job, also mean more income tax. By becoming richer, Jenny has become... poorer.