Really the only problem here is the step-up cost-basis at death that you mention. This is indeed a big problem, and the fix is simple: Your heirs inherit your cost-basis as well (likely $0), so that when/if they sell it they have to pay taxes on the whole capital gain. We could also force the payments over some years, by increasing the cost basis and taxing on that amount. e.g. I inherit a property worth $1M and zero cost basis. After one year, I have to pay capital gains taxes on $100k, but my cost basis also goes up by $100k. Repeat each year up to $1M.

The other stuff (depreciation, 1031 exchange) are very sensible accounting. Depreciation applies only to the improvements (buildings) on the land, not the value of the land itself. This reflects genuine loss of value over time (buildings wear out). And in the event that you sell the property at a profit down the road, you have to pay back all that tax savings at higher regular income rates (not lower capital gains rates). This is called "depreciation recapture." So depreciation can defer taxes, but not eliminate them.

Likewise, when you do a 1031 exchange, your new property ends up with a lower cost basis based on the previous property, so that when you later sell it you still have to pay all that capital gains tax and depreciation recapture. It defers but does not reduce or eliminate taxes.

Of course - if you die while holding these properties, then your heirs get the cost basis reset ("stepped up"), which does indeed eliminate all these taxes. This is what we need to fix.