The people don't need to pay more taxes. An adjustment of current budget allocation is all that's needed. For example, you could double NASA's budget by shrinking the war budget from ~$698,000,000,000 to $678,000,000,000 / year. Seems pretty reasonable to me.
And you should not underestimate the propaganda value. Generations were inspired by the Apollo program. The shuttle is a beautiful machine, but it really doesn't go anywhere interesting.
It's a real place. The ISS is not a "place" - it's something we put up there. It's the difference between going to the woods and camping on your mother's lawn.
Besides that, if we can manufacture spacecraft parts on the Moon, launching them is much easier than launching from Earth. You can even use a maglev rail to launch stuff from there - no reaction mass involved.
