Mitt Romney: End 1031 Exchanges To Save Social Security
Mitt Romney wants the rich to pay their fair share.
The onetime Republican nominee for president penned an op-ed in The New York Times calling for the elimination of tax breaks leveraged by the wealthy. The retired senator said 1031 exchanges, a popular source of capital for commercial real estate deals, should be eliminated in part to help keep Social Security afloat.
Tax reform is needed to plug a deficit in the Social Security trust funds, which are on track to run out of cash in 2034, leading to a 23% cut in benefits for seniors, Romney wrote. That financial cliff, as he called it, has led Romney to change his long-held position on income tax rates.
“On the tax front, it’s time for rich people like me to pay more,” he wrote, suggesting the nomenclature shift from tax “loopholes” to tax “caverns” or “caves” to better reflect their size.
Investors using a 1031 exchange are able to sell a development and use those proceeds to purchase another property, avoiding paying the capital gains taxes that would typically be paid on the profits from the sale.
The taxes from the initial deal aren’t eliminated, but they are deferred for as long as an investor continues rolling proceeds into new property purchases. A provision in the tax code known as the step-up in basis means that assets held until an investor’s death are passed down at the current value, eliminating the tax burden for the inheritor.
Romney wrote that 1031 exchanges and the step-up in basis collectively helped insulate the ultrarich from taxes.
Fixing the Social Security deficit will require spending cuts in the form of entitlement reform, but the scale of the problem is such that the other side of the ledger, increased revenue through taxes, needs to be incorporated into any solution, Romney wrote.
Romney, who made his millions as a co-founder of private equity firm Bain Capital, said the tax reforms could also help tamp down a growing populist sentiment in the United States.
“It would help us avoid the cliff ahead and might tend to quiet some of the anger that will surely grow as unemployed college graduates see tax-advantaged multibillionaires sailing 300-foot yachts,” he wrote.
Romney is a longtime fiscal conservative from Utah who frequently clashed with President Donald Trump and left the Senate in 2025 after serving a single term. Romney came to Congress in 2019 after losing the 2012 presidential election to incumbent Barack Obama.
Billions of dollars flow through 1031 exchanges every year. In 2024, investors used 1031 exchanges for $12B worth of deals, the lowest level of investment since 2012 and down from a cycle high above $18B in 2021, according to CoStar.
Romney’s support for ending 1031 exchanges is unusual not only because a high-profile Republican is calling for what are effectively tax hikes but also because the proposal was part of the Democratic Party platform in 2024.
The last budget Joe Biden proposed as president in 2023 also included an end to 1031 exchanges, but the tax break ultimately survived.
