I was listening to a talk radio host the other day, and he was discussing why we should keep NASA. More than anything else, he said, NASA generates money for the government. An investment in NASA will return the money seven-fold from "product spin-offs," he says. His rationale is that companies will commercially market space technology, which will require hiring workers to produce these products. These workers will pay taxes to the government on their incomes, and the corporations that produce these products will pay corporate taxes. The products themselves will be taxed when they are sold, providing revenue to state and local governments. He suggests that if you disagree, do a Google search for "NASA spin-off products."

Well, some of that is true. Products originally designed for NASA do find their way into consumer markets. NASA actually publishes a magazine, called Spinoff, which highlights these technologies. One of these technologies is the device that controls the laser in LASIK eye surgery. Another is a system that provides commercial airline pilots with realtime, satellite-broadcast weather information inside the cockpit.

Nevertheless, why such a high rate of return on NASA investment? Most of the people who would be employed by the corporations producing these products were already employed by someone else; this means that they had been paying taxes to the government (federal, state, and local) already. No new money has entered the system. In fact, given that employment rates are going down, money has probably left the tax system. The only new revenue the government could get out of these prodcuts is the corporate taxes and the sales taxes, and I doubt that this is seven times more than the original investment.

He then went on to continue to argue for the Laffer curve. Proponents of Reaganomics are familiar with it, even if they don't know it by its official name. The Laffer curve is a function that describes tax revenue. As the tax rate increases from 0 to 50%, revenue from taxes increases; however, 50% is its maximum. After that, it decreases until revenue is at 0 when tax rate is at 100%. What does this mean? It means that as the government taxes people more and more, people will actually lose the incentive to work, since their income increasingly goes to the government. At 100% taxation, no one will work, the curve argues. This is another example of black-and-white thinking. In the United States, there is no tax rate close to 50%. The highest rate tops out at 37.5% (or something close to that); the Laffer curve is a great straw man argument: if you tax people at 100%, then they will not work at all. The only problem with this argument is that no one is suggesting that we tax people at 100%. In fact, if we want to follow the Laffer curve rule, we should increase taxes so that the highest tax rate is 50%; that way, we are guaranteed a maximum of revenue from taxes. The world is not black-and-white or 0% and 100%. There are subtleties in between, and only a child (or someone with a child's logic) would suggest that taxing people at 37.5% is akin to taxing them at 100% (or, because something is true in one instance, it is true in all instances).

Proponents of Reaganomics (which is known to economists as supply-side economics) maintain that cutting tax rates for the wealthy will allow them to hire more workers, since it is the wealthy that own businesses. More workers employed means money for those workers, and those workers will pay taxes. But what about the government's revenue? It will decrease, and the government will have to compensate for that by raising taxes elsewhere or deficit-spending (spending more money than you bring in and borrowing what you don't have). Deficit-spending only works if you pay the money back later, which our government has not been doing. Reagan cut taxes for the wealthy and deficit-spent, massively increasing our national debt. The tax burden ought to be borne by the wealthy, since they can afford it. Our graduated tax system allows us to keep taxes low for people who can't afford to pay the same tax rate as those who can.