TAXES - PULLING MY HAIR OUT

It's really easy to setup.
Go in System -> Taxes, and click on "Manage rates", and then "New".
Here you can set the Tax namekey, for example: "Normal rate", "Reduced rate", and the rate, like 7.7%
Then, go back in System->Taxes and create a tax rule with the Arizona as zone, the default tax category and that tax rate and make it published.

That's it.

Now if you deleted the default tax category, it's gonna be a bit more complex. You will need to recreate the tax category via the "manage tax categories" button of the System->Taxes view. Then, create your tax rule as above and for each product, you will have to assign to it the tax category that you created by editing the product and setting the option "tax category".

I checked your website.
There are two things missing:
1. In your tax rule, you didn't select any tax category. I've done it for you.
2. In your products you didn't select any tax category. I've done it for that one:
childrenstoystoystoys.com/administrator/...sk=edit&product_id=1
So the tax calculations are working for it. You just need to do it for the other products.