If you have 100 shares of Coke and it generates $10 in dividends, you are pay $2 in taxes. (Numbers obviously made up). Whether you spent $2, $5, of $10 of that dividend. The only way to make the dividend tax lower, sell 50 shares, you now have $5 in dividends and a $1 tax due.My point is that whether you spend the $10 or not it is still taxable income and you still pay $2 in taxes on it.So if you sell other assets to generate income to cover living expenses your tax bill is the tax from that sale plus the $2. Hence, spending the $10 dividend reduces the need for other taxable income.
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