I appreciate PG's writing as always.
I'm skeptical that the super-rich are only generating 5% on their money. My anecdotal experience is that it's usually north of 15%. They have access to investments that main-street does not.
If we plug in 15% instead of 5% in PG's reasoning, the effective income tax increase is quite a bit lower.
There is a footnote discussing this point; he uses 5% as the risk-free rate.
Is 5% risk free even available to the little guys?
No.