This is a rush transcript from "Hannity," April 8, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Out-of-control spending is not just a problem at the federal level. It is also crippling state governments. Now, Democrats have just one solution, it seems, for this problem: raise taxes, raise taxes, raise taxes.

Now, take a look at the very latest proposal being considered by Michigan lawmakers that would tax, well, almost everything.


AINSLEY EARHARDT, FOX NEWS CORRESPONDENT (voice-over): President Obama might have just enacted a 10 percent tanning tax on all Americans through the health care bill. But that controversial levy seems tame when compared to all the new things one state could soon be taxing.

(on camera) Currently residents here in the state of Michigan don't pay taxes on consumer services. But the governor, Jennifer Granholm, wants to change all of that with her 2011 fiscal year budget. She wants to decrease the state tax from six percent to five-and-a-half percent, but then apply that same tax rate to some 150 consumer services.

(voice-over) The governor's proposal would tax services such as haircuts, manicures, pet grooming, personal fitness, accounting and tax preparation, child care, cable and satellite TV, wedding planning, landscaping, and even auto and appliance repair.

The net revenue of the restructuring proposal is projected to bring in more than half a billion dollars in the first year alone, money that Governor Granholm says should get to the state's schools.

(on camera) The governor says this year the state of Michigan cut education spending by $165 per student. She says this year she refuses to sign a budget which further reduces school spending. But is a service tax really the way to go?

JEFF MERRITT, RESIDENT: Yes, let's just have more taxes, keep piling them on. Why not?

LAFAYETTE BEERS, RESIDENT: Just another creative way to raise money. And I don't agree with that.

STATE SENATE MAJORITY LEADER MIKE BISHOP, R-MICH.: I am concerned that this is the final nail in the coffin. If we continue to ignore the facts, and the facts are that the consumers can't take it any more. Businesses can't take it any more.

JENNIFER HECKER, CERTIFIED MASTER GROOMER, WHISKERS PET SPA: Services is the first thing people cut out when having financial problems. You don't — they can longer between their haircuts and their grooms for their dogs.

ROBERT STEVENS, MANAGER, SANADA SPA AND SALON: Nationally, 69 salons close a day.

EARHARDT (on camera): A day?

STEVENS: A day. And it's a hardship. It really is. And people have to cut things, and if we pass that tax onto our clients, you know, then little by little we will lose clients.

EARHARDT:And you're scared it's going to hurt your business?

STEVENS: I know it will hurt the business.

PHIL LICARI, CO-OWNER, PRESTIGE IMPORTS: Not too many people are that excited about servicing their car in the first place. Not everyone wants to. It's a necessity that we all need to do in order to keep the car safe on the road. But it's going to be one more thing that's going to be negative towards people's pocketbooks.

MERRITT: It is a big deal. It is a lot of money. I pay enough taxes as it is right now and would not care to pay more.

STEVENS: It's just more money, more money, more money.

JOE LICARI, OWNER, PRESTIGE IMPORTS: I came to America to have the land of opportunity. I never asked for a hand-out from our government. But instead, what I'm getting is pushing out of business.

BISHOP: Families are at the end of their rope. Businesses are at the end of their rope. They just don't want to put up with any more. They're sick and tired of government not listening to them. And the worst thing you can do right now is raise taxes to solve the government's problems.

EARHARDT (voice-over): We did find at least one person who wasn't opposed to the idea.

SUSAN HARVEY, RESIDENT: We have to make up the difference somewhere in addition to cutting costs. And that I think a service tax should, in fact, be considered.

EARHARDT:But the majority of those we spoke to say they've had enough, and this was the message they wanted to pass on to the governor.

LICARI: No more taxes. Support your people.


HANNITY: And our own Ainsley Earhardt joins us right here in Grand Rapids.

Ainsley, welcome aboard. It's good to see you.

EARHARDT:Thank you.

HANNITY: Say hi to Ainsley, everybody.

EARHARDT:Hey everyone. Yes. I love Grand Rapids.

Thank you. Thank you.

HANNITY: You know, I've got — first of all, we've got to set the stage, because the governor already raised taxes dramatically and promised revenues would go up. They plummeted dramatically.

EARHARDT:Right. And her favorability rating has plummeted dramatically, too.

HANNITY: To 38 percent.

EARHARDT:Well, 56 percent unfavorable opinion now, according to the Detroit Free Press. And then 72 percent have a negative opinion of — about the job that he's done.

HANNITY: It's interesting, because Obama is almost duplicating everything she's doing. And I've got to assume that the result is going to be the same.

So now let's go through this. They're going to tax haircuts. By the way, I've never had a manicure. But they're going to tax manicures. Pet grooming, personal fitness, accounting, tax preparation, child care, cable.

EARHARDT:Tax preparation. Accounting. So in order to get your taxes done, you have to pay an extra tax.

HANNITY: Yes. You have to pay an extra tax for your accounting...


HANNITY: ... to pay the government.


HANNITY: Good emphasis. Good point.

EARHARDT:Sorry. Had to interrupt on that one.

HANNITY: No, no, no. What really scares me, you can't tax cable and satellite, because I'm in that industry and that might — you know, I'll have fewer viewers. That's not good. But they're going to tax that too.

Wedding planning.

EARHARDT:Wedding planning.

HANNITY: There's a couple over here. You want to ask — are you thinking about it? All right. Come on up. If you really want to, you can come in. Feel free at any moment.

EARHARDT:No pressure. Gee, Sean.

HANNITY: All right, so wedding planning, landscaping, auto and appliance. How does everybody here pay for this?

EARHARDT:That's what everyone is saying. We really — we went down — up and down streets, downtown. We were out in the communities. I got here yesterday morning. We hit the pavement immediately. I found, I think, two or three people that — one lady as you saw in the piece was for it. One other guy says he was for it. Another guy says he's on the fence. Everyone else was completely against it, Democrats and Republicans.

HANNITY: But there was a big report today. It came up on the AP. It was the Drudge headline last night before I went to bed. And I got here in Grand Rapids, and I'm reading the Internet. And 50 percent of Americans no longer pay taxes. They don't pay income taxes.

So we — and it seems like, at this point, what incentive is there going to be for the people that are paying taxes? Are people saying, "I'm not going to invest. I'm not going to — I'm not going to get my dog" — I used to say to my little dog, Snowball, send her to the cleaners — get your grooming.

EARHARDT:Right. Well, the good news for the folks who are against this, I don't think it is going to pass, based on the research I have done, because the House and the Senate will have to pass it. The Senate is majority Republicans. They are completely against it before it gets to her desk.

She's tried to pass it. This is the third time in three years. And she's failed each time. This is the last time. She won't be governor again because of term limits.

HANNITY: Thank God.

EARHARDT:She says — I do want to point out. I do want to point out, I have read articles where she has said she doesn't care because she thinks it's the best for Michigan. We did try to get her on the show, Sean. We tried to interview her. We invited her to the bookstore, and her people said this is not a good week for her.


HANNITY: You know, Barack — oh, I bet it's not a good week for her. Barack Obama actually said — he turned down my invitation also. What is up? I'm beginning to get a complex.

EARHARDT:Well, the rest of Michigan loves you. The rest of the U.S. loves you, Sean.

HANNITY: Thank you. Ainsley, welcome to Grand Rapids, thanks for being with us.

EARHARDT:Thank you. Thank you.

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