This is a rush transcript from "Hannity," April 22, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: So, after vowing not to increase taxes on anybody making less than $250,000, the Anointed One now appears to be considering a value added tax. Now, that is a tax applied that's applied to nearly all goods and services. And here's what the president told CNBC when asked about the subject just yesterday:


PRESIDENT BARACK OBAMA: I know that there's been a lot of talk around town lately about the value added tax, that is something that has worked for some countries. It is something that would be novel for the United States. And before I start saying, this makes sense or that makes sense, I want to get a better picture of what our options are.


HANNITY: Now, some members of the administration though appear not to have gotten the message. Take a look at the White House propaganda minister and what he told reporters yesterday:


ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think, I directly answered this the other day by saying that it wasn't something that the president had under consideration.


HANNITY: All right. So, maybe he should talk to his boss. Now the same goes for Vice President Joe Biden who seemed like he was trying to cover for the anointed one earlier today on the view.


WHOOPI GOLDBERG, 'THE VIEW': If we are going to start talking about a national sales tax, on top of everything else, what taxes can you guys remove?

VICE PRESIDENT JOE BIDEN: We weren't talking about that.

BARBARA WALTERS, 'THE VIEW': The president is.

BIDEN: No, the president said he was open to listening about that


HANNITY: All right. So, what is really going on here? Joining me with analysis is Iowa Congressman Steve King. Congressman, good to see you. Thanks for being here.

REP. STEVE KING, R-IOWA: It's good to be back with you Sean, thank you.

HANNITY: All right. So, the president floats the idea, Paul Volcker floats the idea, and Gibbs says no, the vice president says no, Geithner says no but then says we've got to increase revenues.

How serious is the talk of a national sales tax on top of income taxes in Washington today?

KING: Well, I think it is really serious. I mean, clearly they have floated the trial balloon. Paul Volcker floated it as blatant and open as it could be. And I thought then that all of America should have lined up and shot that trial balloon down.

But now, we've got the president himself speaking about it being a novel idea for Americans. We know that the president has been actively engaged in supporting about anything that he can import from Western Europe including Spain's cap and tax program as the model we should follow. And we know that's a catastrophe. The value added tax, the VAT tax, the catastrophe out of much of Europe not quite all of Europe.

That's what I expect they are going to try to prepare the groundwork for. I don't know how they pay for Obama care unless they step beyond and do something like this value added tax, which is insidious and it's regressive and the taxes that people that have the least amount of income and it gives government the maximum opportunity to maximize their tax revenue.

It is a horrible thing to think about in a free country. And if ever adopt the value added tax, of vat tax, it will be a big step towards the death knell of the liberty of a formerly free people.

HANNITY: Yes, I mean, what's amazing to me about this is it has been tried in Europe and it's only resulted in a lack of economic growth. But the bottom line is the president has already spent all this money. He's already accumulated three trillion in debt in two years. He's projected now out another $10 trillion more in debt and we are not even talking about the health care debt.

So, I guess in a liberal's mind, the only way to raise taxes if you don't believe in cutting growth and unleashing economic activity, is that you've got to tax people, you've got to confiscate their wealth.

So, is this something that we would expect after the election or after 2012, thinking that he's going to get reelected?

KING: Oh, I think that, you know, they will be looking for a crisis situation. They are seeking to characterize this as a crisis situation. And when you look at the predictions that by 2020, just 10 years from now, it is projected out of the Obama budget, there are 100 percent of the GDP will be the equivalent of the national debt. That's the national deficit. That's a huge number. And it is chilling to think that all that we could generate in a year would be all it would take to payoff the national deficit that we have in spending.

So, this is the only alternative they have. They do want to grow government. I'd add this to all the nationalization that we have seen. A third of the private sector activity, plus Obamacare, plus the student loan program. Where else do you go if you want bigger and more government? You go to the European model that originated in France.

And by the way, the value added tax in that part of the world, Denmark for example, started at nine percent, today it is 25 percent. The Danes that I talked that are private sector, business entrepreneurs tell me their tax burden is at 75 percent. And I asked them why do you go to work? That's the question Ronald Reagan asked back in 1975.

HANNITY: Yes, but look, I can tell you right now for example, if you are in New York or New Jersey, under President Obama, your income tax when the Bush tax cuts expire, that's going to be 40 percent. A 25 percent increase in Medicare taxes to another 4 percent which is where it's going to end up. You add to that, county taxes, property taxes, 9 or 10 percent sales taxes or 7 or 8 or 9 percent sales tax and everything else, we are at 70 percent in a state like New York.

KING: You know, Sean —

HANNITY: That's without the value added tax.

KING: You make a really good point on that in a way it is. And I recall in back, actually in the 90s, I went around and did seminars in the five states there in the Upper Midwest on tax burden that I took self- employed people because they were my trade association and went through and added that up and got input from the group always. And we would add up the federal income tax, state income tax and the excise taxes and we would get up there over 50 percent. And I would save the sales tax until last because if you're paying 50 percent on everything else, you are paying that with after tax income as a rule. So, you double that number. So, if it is seven percent sales tax, it's actually 14. And we found, even then we were between 65 and 75 percent tax liability.

So, when you accrue this and add the property tax to the way you said, it does come to a number that is in that 75 percent range. And the burden of government is so great, that it has diminished the vitality of the private sector, what's left of it in America. And if we are going to take this country up to the next level above the shining city on the hill that we have become because of Ronald Reagan, we're going to have to lower taxes, less government. And it isn't going to work for us to slow the growth of government. We are now going to have to come back in, after November with new majorities and actually cut real government spending and lay this out for the long term to get to a balanced budget and do that in a short period of time.

HANNITY: All right, congressman, I have to tell you something: I'm concerned that we're now crossing a threshold, irreparable damage. I don't know how it is going to become feasible or possible to payoff the amount of spending and the amount of debt that we are accumulating. But we'll continue to watch it.

Congressman, thanks for being with us.

KING: Sean, if you had another moment.


KING: OK. I just want to add that the real solution for this is a consumption tax but it's a national sales tax, the fair tax. And that it will get us to where we can repeal the 16th Amendment. And we take all the tax off of production and we put all the tax on consumption that shifts this thing around.


KING: That's the difference and you are on the same page.

HANNITY: A national sales tax alone eliminating the income tax from the IRS, it's a very separate concept from adding the national sales tax to the federal income tax that currently exists.

I mean, it is at the point where we are going to destroy all production but, congressman, thanks for informing us. I appreciate it.

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