Mitt Romney, once a standard-bearer of Republican fiscal conservatism, is now calling for higher taxes on the wealthy — including the end of longstanding real estate tax benefits that have shaped commercial investment for decades.
In a New York Times opinion piece, the former senator from Utah and 2012 GOP presidential nominee wrote that both major parties must accept “painful compromises” to confront the national debt and a looming Social Security shortfall. “Typically, Democrats insist on higher taxes, and Republicans insist on lower spending,” Romney wrote. “But given the magnitude of our national debt as well as the proximity of the [Social Security Trust Fund] cliff, both are necessary.”
Romney proposed changes to Social Security and Medicare, noting that they account for much of federal spending. But he also focused on the tax code, saying, “It’s time for rich people like me to pay more.” His proposals would mark a significant shift from positions he held while in office.
Among the most consequential ideas: lifting the income cap on wages subject to FICA employment taxes, ending the “step-up” in cost basis that erases capital gains on inherited assets, and repealing Section 1031 exchanges that allow real estate investors to defer capital gains taxes. Romney argued that such measures, though traditionally defended as supports for family farms or small businesses, are now disproportionately used by billionaires to avoid taxes. He wrote that the step-up provision should be eliminated for estates exceeding $100 million.
“The depreciation of buildings, including debt, shields income from taxes,” Romney wrote of the 1031 exchange provision. “As with the previous example, hugely profitable real estate properties held at death are not subject to the capital gains tax.” He argued that closing these loopholes would raise needed revenue while having “little impact on economic growth” — and might help “restore some sense of confidence in our capitalist system.”
Despite his political influence, Romney’s proposals face long odds. He is no longer in government and would need backing from both chambers of Congress, including a 60-vote majority in the Senate, for such reforms to advance. Still, Romney has a record of bipartisan negotiation, and Democrats could theoretically use the budget reconciliation process to pass parts of his plan with a simple Senate majority if they regained control of the chamber.
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