We need to weaken the Federal government so state's rights matter again. That was the concept of the U.S. in the first place. United States not one big Oligarchy. Still, people can vote with their feet. If you want to live in La La land, move to CA, OR, WA, MA, CT, RI, HI, MD, NY, VT, IL, MN, etc. There are many ultra progressive states in which to choose. But, stay in the metro areas, as if you wander out, you are fair game, even in the Progressive states.
These are key points.
It wouldn't immediately divide the country, but neither would it rip it apart. Allow States to tax or subsidize that which they feel is important. Allow States to regulate businesses and our lives as much as their residents feel prudent. States that choose wisely will grow and prosper and more people will move there.
We still need a Federal Government for inter-state policies and for national defense, but the function of the Federal Government should be more of an enabler for the various States and less of a controlling authority for them. As for financing the Federal Government, rather than taxing all individuals the Federal Government should collect fees from each State, but the States should be responsible for the method they choose to raise those funds.
We would see some States go the Socialist route, and some States go the Capitalist route, but most would choose policies somewhere in between (ie, the Bell Curve). Each system would be given teh chance to succeed or fail on it's merits and as a Citizen of this Union of States, I could choose to live and work under the system I prefer.