Romney Donors Grapple With the Fiscal Cliff and Taxes

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They spent millions of dollars backing the wrong presidential candidate, they were geared up to celebrate an Election Night victory that never happened, and now there's a good chance their marginal tax rates are about to go up.

They are the Romney high dollar donors. Mel Sembler, co-chair of Romney's Florida finance committee and a former ambassador to Australia and Italy, told ABC News he is "very discouraged" after supporting Mitt Romney for five years. Former bundler Eugene Atkinson is still "moping" over the election's outcome.

  • The former Romney donors explain why raising taxes on the wealthiest should not be an option

Romney's biggest donors have said they want to keep the finance team together and in contact possibly to support future candidates or issues in the future. Donors involved did not know exactly what causes or candidates they would back, but were committed to keeping the group of fundraisers in contact.

"Money in politics is nothing but voice," said Sembler. And just because the campaign is over the fundraisers are not keeping their opinions on the current state of affairs in Washington quiet.

High on their list is the potential increase in taxes and the fiscal cliff, which is what will happen at the end of the year when large spending cuts will take effect and tax cuts for most Americans will expire if Democrats and Republicans don't come to an agreement.

Republicans and the president are debating over whether to increase the top marginal tax rate on incomes above $250,000, with President Obama, who campaigned on the issue, insisting it has to be part of any fiscal cliff deal. It's the central arguing point in negotiations to avert what's known as the fiscal cliff.

Sembler supported Romney for five years, since his first run for the presidency in 2007, noting we "never really quit" after the last campaign.

"While we didn't get enough votes and lost the election, I still have great concern, not much about Mitt -- he will do wonderful, he's a successful guy -- but I'm concerned where this country is going," Sembler said.

Sembler said his main concern is the national debt, now over $16 trillion, and entitlements, an issue the Romney campaign put in the spotlight by choosing Paul Ryan as his running mate.

"You can take all the money from the rich that they have made and it wouldn't solve the problem," Sembler said. "Raising taxes $100 billion a year is not where the answer is. Where is your problem? Your problem is entitlements, the third rail of politics."

No one in politics wants to bring up the issue of entitlements "except Paul Ryan," said Sembler, adding it's "probably one of the reasons they got defeated because they were talking about entitlements."

He believes we've become "an entitlement nation," and one way to confront the problem is means testing: In the case of Medicare, if seniors can afford not to get entitlements, they won't be part of the pool.

"We should 'means test' for Social Security," Sembler said.

"My point is, the present administration is not addressing the current problems," Sembler said. "They are basically running for the 2014 elections for the House and the Senate. This administration is not addressing the real issues. The real issue is, we are going broke as a country."

Sembler noted that although raising his taxes wouldn't affect him personally, it could affect his business. He heads up the Sembler Company, which develops and manages shopping centers.

"It takes money away that you could invest, that you can use to create more jobs," Sembler said. "This administration never wants to talk about cutting spending.... It is a very serious problem."

Eugene Atkinson, who spent 20 years at Goldman Sachs, agrees with Sembler, adding, "Raising tax rates on who Obama calls the wealthy doesn't raise any money."

It may not be popular with megadonors, but taxing the rich is popular with the American people, according to an ABC News-Washington Post poll from last month. Sixty percent of those polled said they support higher taxes on annual incomes above $250,000 while 37 percent are opposed.

"I have a firm point of view that there are ways to put revenue on the table through curbing tax loopholes," Atkinson, who also attended the Romney donor retreat in Utah in June, said. "I am vehemently against raising tax rates.… Republicans are ready to raise revenue by cutting loopholes. To say it's only fair for the wealthiest Americans to pay a bit more is baloney because the top 10 percent of taxpayers pay 75 percent of [taxes] already."

According to 2009 research available from the Congressional Budget Office, the top 10 percent actually pay 78.2 percent of federal income taxes and 51.8 percent of total federal taxes.

Republicans currently in negotiations with the president, as well as both Romney and Ryan on the campaign trail, stressed that tax increases will hurt small businesses. Atkinson says those who make $250,000 are not wealthy.

"It's really funny the Democrats posture this $250,000. A young woman working and a young man working, and they have three kids and they make maybe $300,000 or $400,000, and they are barely getting by, and to call them the wealthiest Americans just doesn't make any sense," Atkinson who is now the founder and managing director of Atkinson Capital, said. "To raise the [tax] rates because Obama wants to do that because he's been saying that for four years doesn't make it right, raising rates by a few percentage points only increases revenue a little bit."

According to the Office of Management and Budget, if Congress were to enact the Obama tax rate proposal and extend the Bush tax cuts, except for those making $250,000 or more, it would raise $836 billion over the next 10 years. That would reinstate the 36 percent and 39.6 percent income tax rates for single taxpayers who earn more than $200,000 and married couples who earn more than $250,000.

Although Atkinson says the home mortgage deduction is "sacrosanct," the carried interest loophole is one he says could be eliminated. It allows hedge fund managers and other investment firm executives to pay taxes on their earnings at the capital-gains rate, which is lower than the rate for regular income. It's an issue that Romney, former CEO of Bain Capital, had to dodge himself during the campaign.

"I think Republicans are being very forward," Atkinson said, before referring to the negotiations with the administration. "We are giving some revenue increases … you've got to give us some spending breaks."