Precisely the correct question - cap gains at that same 7% would yield $700k/year and be taxed at a rate of less than half the income tax rate.

Cap gains of $700k per year would mean this household had an income of $700k per year, and so be in the top 1% of incomes.

Only if they choose to do so by selling their investment if I understood the previous comment correctly.

If they don't realize it, they don't get taxed on it. I read the comment as stating they are getting taxed every year.