G.I., meet I.R.S.

by David Safier

No, the headline isn't hinting the Goldwater Institute is being audited by the I.R.S. I assume its taxes are filed correctly. If you're an accountant and want to see for yourself, G.I.'s tax returns are on line, like all non profits. You can look over the 2008 return here (On page 7, you'll find the salaries of the 4 highest paid employees).

I bring up the I.R.S. because I want to introduce Darcy Olsen, G.I.'s President and CEO, and Byron Schlomach, G.I.'s director of the Center for Economic Prosperity, to page A-12 of the 1040 Forms and Instructions guide.

That's where it lists approximately how much families of different sizes and different incomes spend on Arizona sales tax in a year.

But before I give the figures, I want to remind Olsen and Schlomach what they have both said in public — a penny hike in sales tax will cost an average family of 4 about $600 a year.

Here are the I.R.S. figures for how much a family of 4 spends on sales tax at the current 5.6% level, broken down by incomes. Remember, this figure will be 5.6 times higher than the penny raise Olsen and Schlomach are talking about.

• $60-70,000: $739
• $90-100,000: $932
• $140-160,000: $1,242
• $180-200,000: $1,456

To find out how much a penny raise in the sales tax will cost, just divide the tax amounts by 5.6. For the lowest income I list, $60-70,000, that comes to $132. For the top income, $180-200,000, it comes to $260.

Oops! If the I.R.S. is anywhere in the ballpark with its figures, that means you have to be making about $400,000 per year before a penny increase costs you $600. Not even Darcy Olsen and Clint Bolick make that much.

Even if the I.R.S. is way off (It seems to assume people spend about 20% and 25% of their income on items with sales tax. I don't know how accurate that is), there is no way an average Arizona family of 4 will spend anything near $600 a year on a 1% tax hike.

Are the I.R.S. figures wrong? Or have I misinterpreted Olsen's and Scholmach's words and distorted what they said? If so, someone please straighten me out.