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Doesn't the second para. beneath contradict itself? Don't the boldened words contradict each other?

      So let’s pick up where we left off a few chapters ago. Recall that the net annual return was 7.8 percent for the average equity fund over the past 25 years and 9.0 percent for the S&P 500 index fund. With the high portfolio turnover of actively managed funds, their taxable investors were subject to an estimated effective annual federal tax of 1.2 percentage points per year, or about 15 percent of their total pre-tax return. (State and local taxes would further balloon the figure.) Result: their after-tax annual return was cut to 6.6 percent.
      Despite the higher returns that they earned, investors in the index fund were actually subjected to lower taxes, largely derived from their dividend income. The extremely low costs of index funds consume less dividend income relative to actively managed funds, resulting in higher dividend yields and, therefore, higher taxes on dividends.

John Bogle's The Little Book of Common Sense Investing, 10th Anniversary Edn. Pages 87, 88.

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Doesn't the second para. beneath contradict itself? Don't the boldened words contradict each other?

No, not necessarily. English is high context language and the passage above is a bit ambiguous but there is no necessary contradiction here.

Despite the higher returns that they earned, investors in the index fund were actually subjected to lower taxes, largely derived from their dividend income

This likely refers to the fact that in the US, dividends from long term investments are subject to lower capital taxes than let's say capital gains that you get via trading (see article about it here)

The next passage here:

The extremely low costs of index funds consume less dividend income relative to actively managed funds, resulting in higher dividend yields and, therefore, higher taxes on dividends.

when talking about higher taxes likely just refers to the fact that in the US the higher your income the higher income tax you pay. US has progressive capital income taxes (at least on the paper due to loopholes effective tax rates might not always be). In addition since taxes are payed as a fraction of your income even if there would be flat $10\%$ tax on capital income, if your income \$10000 you will pay more taxes than when your income is \$1000, so your tax bill will higher when your income is higher.

This being said again the passage is highly ambiguous so it is not clear what the author means, but it is not necessarily a contradiction.

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