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The USA speaks on raising taxes

Jason

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The US deficit is huge. Reduction needs BOTH reduced expenditure and higher taxes. Any politician who tries to argue that just one of these levers will work is being economical with the truth. Almost certainly the USA will also use QE to inflate it's way out of a proportion of the debt.
 
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I think we need to raise taxes, however, we in this country have a history of raising taxes and not cutting spending.
 

atlclgurl

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Why isn't the Republican party listening?
23 Polls Say People Support Higher Taxes to Reduce the Deficit



23 Polls Say People Support Higher Taxes to Reduce the Deficit | Capital Gains and Games


Because Washington, and that includes ALL of Washington, all branches of the government, yes, including the judicial branch are owned and controlled by the uber-wealthy... who refuse to pay any tax they absolutely don't have too and will take any and every means to avoid paying even a cent of tax if possible.

All one need to do is look at GE's tax avoidance dace and the fact that they paid a "small" tax bill for 2010. The following Propublica article cites a SEVEN (7) percent tax rate for a multi-billion dollar company. And they KEEP pushing for a "lower" bill!

Setting The Record Straight on GE’s Taxes - ProPublica
 

Jason

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I think we need to raise taxes, however, we in this country have a history of raising taxes and not cutting spending.

The reality of the deficit is that the USA has to do both or face the fury of the markets. Unfortunately there is no "nice" solution, no "nice" tax rises or "nice" cuts. There is a comfortable belief in the UK that somehow it is possible to tax the rich. The Coalition have put this to the test. We've increased our income tax on the highest earners from 40% to 50%. While I'm slightly jumping the gun as official figures are not yet published the leak is that the result has been LESS tax collected. Tax, if it is to work, has to be on middle and low earners. The rich employ good accountants, get domiciled elsewhere, decide not to do extra work or take extra salary - we're deluded if we think we can tax them.

The question for all presidential candidates is how they plan to match the austerity of the UK and many nations in Europe. In the UK we have major cuts and major tax rises. The USA needs similar. The cuts have to be greater than the Tea Party dream of while the tax rises have to be higher than the most left- leaning democrat suggests, and the USA needs both. The clever economists in both parties know this, and all presidential candidates should be honest with the electorate and say this.

From what I've seen of the US press the delusion is still that either tax rise or spending cuts alone can do the trick. The markets will call time on this madness with higher bind yields.
 

vince

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One trouble is Jason that the USA now runs a non-stop election cycle. The only business that gets done in Washington is the business of politics. The people's business and what is good for the nation is not even thought about by their representatives. I think that is all they actually know how to do and that even if they did stop politicking for few months, they wouldn't really have a clue about governing or finance or justice.


So I really don't expect anyone there to do the right thing and even if they tried it would have a snowball's chance in hell. I am getting really pessimistic about the situation there and am very worried.
 
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dandelion

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The Coalition have put this to the test. We've increased our income tax on the highest earners from 40% to 50%.
Wasnt it in fact the labour party which did this in its final budget?

While I'm slightly jumping the gun as official figures are not yet published the leak is that the result has been LESS tax collected.
Indeed you are. How has the total take from all taxes changed? What change was expected due to the changing economic position? Has income been switched into capital?


Tax, if it is to work, has to be on middle and low earners.
So why dont we just ask the Chinese if we can join their country? No? I dont really accept your argument. The only possible end result of such a course is a bankrupt country and a mix of unemployed and rock bottom wage earners. Plus some very rich living in gated estates. This just cannot happen in a democracy where people ultimately have a vote and will force a halt. It is a recipe for revolution. (riot? did someone mention riot?)

A relevant issue might be the sale announced today of some UK computing company to Hewlett Packard. Guess whether they may be transferring elsewhere. Whats needed is a law to prevent this sort of loss of british industry abroad. Stay here and pay taxes here. Maybe we should outsource the british army to someone. Iran perhaps? Maybe they would do it cheaper? there comes a point where this mantra of free movement of companies around the world simply becomes insane. It will have to stop. And a starting point is to sort out the tax system and push up taxes on the rich (which pretty much equates with taxes on companies)


The question for all presidential candidates is how they plan to match the austerity of the UK and many nations in Europe.
Seems to me the US underspends compared to europe on social programs and overspends on military. Some rebalancing not simply cutting is called for.


The cuts have to be greater than the Tea Party dream of while the tax rises have to be higher than the most left- leaning democrat suggests, and the USA needs both.
My inclination is to agree. Because it looks to me as though borrowing to spend and boost the economy has been tried and failed. Or more precisely, it worked as expected but now it has stopped the economy has started to go backwards. The analysis I have seen is that the US economy is in serious structural decline because exactly of this phenomenon of moving jobs abroad. The 'free market' is now moving against all the developed economies.
 
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Jason

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So I really don't expect anyone there to do the right thing and even if they tried it would have a snowball's chance in hell. I am getting really pessimistic about the situation there and am very worried.

I suspect you are right. For more than a decade the EuroZone has put politics before economics. Politicians really do seem to have believed their own rhetoric and have ignored all the clever economic advisors who have told them how it really is. There's even been a system of giving research grants to the academic economist who says what the politician wants to hear. But markets trump politics. I suspect the USA will come up with some sort of sticking plaster which will calm the markets for bit, so a politician can claim to have solved the problem. But it won't be solved.

I think the USA is launching on a path where the debts force an unprecedented level of international co-operation. The immediate solution is more QE, but this makes an economy vulnerable to speculators. The defence is co-operation with other central banks to support mutual needs. It won't be China, and the EZ has problems that are too big. It will be the UK, Canada, Australia, NZ and a few others large and small, possibly including Japan and India.

The EZ politicians refused to talk about. The possibility of euro failure, so now we're all playing catch up with the idea. I think the US politicians are similarly refusing to talk, but there will be planning behind the scenes.
 

conntom

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Why isn't the Republican party listening?
23 Polls Say People Support Higher Taxes to Reduce the Deficit



23 Polls Say People Support Higher Taxes to Reduce the Deficit | Capital Gains and Games

There are lies, damn lies and statistics.

Lets throw polls in there too.

Tell the gov't to stop wasting money on lazy people, other nations, unnecessary wars and the like BEFORE you ask me for one more dime.

Want to raise taxes? How about the 50% of people who pay nothing in fed taxes actually start paying some and get some skin in this game.

Raising taxes on the millionaires is a farce. It won't generate what they need, those taxes they need are going to be coming from the middle class like it always does and we all know this.
 

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We need to cut the defense budget down to the minimum, stop all the wars and withdraw troops from Iraq and Afghanistan.
 

MercyfulFate

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There are lies, damn lies and statistics.

Lets throw polls in there too.

Tell the gov't to stop wasting money on lazy people, other nations, unnecessary wars and the like BEFORE you ask me for one more dime.

Want to raise taxes? How about the 50% of people who pay nothing in fed taxes actually start paying some and get some skin in this game.

Raising taxes on the millionaires is a farce. It won't generate what they need, those taxes they need are going to be coming from the middle class like it always does and we all know this.

Lazy people, like the unemployed?
 

MercyfulFate

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Cute how y'all only see a small part of the whole story.

Who's ya'll exactly? I picked that out because it offends me.

Also, Obama should have stopped the wars but since he has no spine it hasn't happened.
 

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News item today that france has announced tax rises for the rich and big companies. Following, I understand, the beginnings of a campaign by millionaires to pay more tax.

The BBC naturally had some experts in to debate it. The pro tax guy said he had studied this for years. In the UK no rise in tax rates had ever led to a drop in revenue. Nor were any millionaires leaving the country, and they never had for reasons of tax.

The anti guy said this was nonsense and there was loads of evidence that raising rates reduced tax take, and made people leave the country. The figures for the recent tax rise on high earners showed it had either raised nothing or reduced take.

The pro man said the figures hadnt been released yet, so it was difficult to decide what they showed. He said that quite a few high earners had indeed been leaving the country recently, because they used to work for banks and had just been sacked, so they had gone back to whichever countries they came from. He also said he had made a study of people over the years who had declared they would leave the country if tax rose. When tax did rise, none of them left.
 

MercyfulFate

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News item today that france has announced tax rises for the rich and big companies. Following, I understand, the beginnings of a campaign by millionaires to pay more tax.

The BBC naturally had some experts in to debate it. The pro tax guy said he had studied this for years. In the UK no rise in tax rates had ever led to a drop in revenue. Nor were any millionaires leaving the country, and they never had for reasons of tax.

The anti guy said this was nonsense and there was loads of evidence that raising rates reduced tax take, and made people leave the country. The figures for the recent tax rise on high earners showed it had either raised nothing or reduced take.

The pro man said the figures hadnt been released yet, so it was difficult to decide what they showed. He said that quite a few high earners had indeed been leaving the country recently, because they used to work for banks and had just been sacked, so they had gone back to whichever countries they came from. He also said he had made a study of people over the years who had declared they would leave the country if tax rose. When tax did rise, none of them left.

Ever western nation should raise taxes in unison on the rich, maybe they'll all move to China.

Which will show their true colors.
 

Mensch1351

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Well now -- here we have a definition of REAL Patriotism: As long as I get a bigger slice of the pie, I'm all FOR America. Cut my piece down and dog-gum-it, I'll take my companies overseas, lay off American workers and just may move out altogether! "God bless.............whatever country gives me the best deal," my home sweet home! As they say in Texas, "Sheeeeeeet!"
 

Horrible

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Well now -- here we have a definition of REAL Patriotism: As long as I get a bigger slice of the pie, I'm all FOR America. Cut my piece down and dog-gum-it, I'll take my companies overseas, lay off American workers and just may move out altogether! "God bless.............whatever country gives me the best deal," my home sweet home! As they say in Texas, "Sheeeeeeet!"

Put an UT at the end and you've got it! Ie "sheeeeut boy, that dog don't hunt"
 

ShannonH

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This entire debate is the same major distraction that the US has had for decades, which is basically deliberating over an issue of implementation and pretending it's a moral stance.

Raising or lowering taxes can raise _or_ lower revenues. It could raise revenues short term, but decrease them in the long term. It could raise both, or lower both. The big problem, that someone else already stated, is that it's not just about taxes or spending, but both. The budget is ridiculously out of balance and as evidenced by the recent credit downgrade is just continuing to get worse. There's a lot of rhetoric but so few people are actually looking at the numbers.

So right now, the tax revenue/GDP is 27%; with the anticipated rise in spending due to the aging population and increased debt interest, this is looking like (according to the Obama administration) it could rise over 1.5x and hit ~43%. This is assuming the same economic growth we've seen in the past 10 years, which is probably too optimistic, so it could be even higher. What you're looking at is a tax/GDP even higher than France's; while this doesn't sound immediately shocking, consider that this is just to maintain the current level of government programs that exist in the US today, and that France absolutely dwarfs the US in their level/quality of social programs (although they are having spending problems of their own right now.)

The US needs to treat this seriously, but since you are in a constant election cycle all politics is focused on the next 2 years, so even 14 years is too long-term to hear any real solutions.

I brought this up in another thread, but before you start thinking that socialized medicine is expensive and the US has an open-market in medicine, you should know that the US spends more per-capita on healthcare than Canada does. This is a huge bureaucratic/economic/political/corruption issue, and not just something you can dump more money in to. Just watch a little daytime TV and see the number of ambulance-chasing lawyers advertising if you want a sense of just how much waste is there right now :)
 

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It isnt just medicine. If there is plenty of money around then people do not care about waste. If some people have plenty while others have none, then those with the money (and probably power) still do not care about waste. The US is the worlds greatest energy user per head. This is not sutainable.

In the UK the level of private borrowing to buy houses had reached the point before the recent crash where it had begun to look unsustainable. There was not enough money in the UK to lend and it relied upon imported foreign money. This was a matter of concern to the bank of England. Luckily, the US crashed the world economy, so this steady rise in borrowing stopped. If it had not been stopped by this intervention, then the risk was that it would have stopped anyway. Any interruption in the money supply would cause the property market to halt. If it became clear that prices could not go on rising, then the assumptions behind all that buying start to unravel. It could no longer be assumed that whatever you spent now, you would be guaranteed a profit any time in the future if you had to sell. The property bubble would burst and everyone would be left with staggering unrepayable debts. This still hasnt happened, but it is what lies behind the fact that UK official interest rates are zero. Should mortgage loan rates start to rise, there will be a wave of defaults and all hell will break loose. How is this situation in the US?

All that mortgage money has been contributing to growth. The nation has had mortgage fueled growth for decades and has become used to it. This is going to stop. It has already stopped since the crash, but the government is waiting for it to resume. Since it was destined to crash anyway for one reason or another, it isnt going to. How stands the US on this one?

The UK plan to pay off its debt is to wait for growth. In the meanwhile, it will continue to borrow. If no growth arrives, what happens? How stands the US on this?

No growth, no way to pay off the debt. It cannot rise forever. There will be a default. Just a question of time. Unless someone can explain where there is an out.

It is argued that spending creates growth. Taxes soak up money and reduce growth. So raise taxes and try to cut the debt, and trash growth. Or cut spending and thus trash growth, and tax take will go into a downward spiral. All nations on earth are overborrowed. They were all running on the edge before along came this bank induced crash. Can anything keep the balls in the air, or should we now be moving on the debate to the best way to manage world bank collapse and what implications these defaults will have for us all. I suppose its fairly simple. If all debts are repudiated, then whoever lent that money will not get it back.

So thats why the price of gold is skyrocketing, because people believe banks are unsafe. The BBc said today the inter bank lending rate is rising again, which means banks do not trust each other, and industry which is now amassing cash rather than investing it, prefers to lend directly to other companies rather place it on deposit in a bank even though at a higher rate.
 

Officer5633

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Hey everyone, here is a solution no one has mentioned...

Think LONG-TERM for once. Instead of everyone thinking of the national debt, and the yearly deficit, raising/cutting taxes, and killing programs and all this nonsense, think long-term.

Chart a course for the country to be on for the next 30 years, instead of 1 or 2.

Chart long-term tax strategies, like introducing a 10% VAT (national sales tax), phased in over 10 years, that could add $1 trillion per year in revenue.

Implement a more progressive tax schedule (10-15 brackets, higher rates for rich people), or a progressive estate tax (that starts at estates valued at $1 million). This could easily raise $500 billion per year in revenue.

Increase the capital gains taxes to historical levels (closer to income tax rates). This could also, easily raise at least $250 billion a year in revenue.

Lower military spending over the long-term, to sustainable levels. This is around 1.5-2.5% of GDP, instead of 4.9% today.

Increase long-term investments!! A goal of having 75% of the country attain a Bachelor's degree by 2040 is a goal that can be met. More grants, more funds to teachers, schools, etc. R&D investment, massive amounts of it- to keep the US competitive with Korea, China and Japan.

Pass a Universal Health Care law, so every citizen has quality healthcare, and lets US businesses become more competitive globally. Also, it will dramatically reduce the inequality between the rich and poor when it comes to medical care (rich get great care, poor get crap).

Create incentives to manufacture. This could be tax incentives, increased tariffs, buy-America provisions in legislation, adjustments to trade deals, reworking of NAFTA, etc.

We need to think long-term to solve our problems. Nothing happens overnight. I'd have a hell of a lot more confidence in a country that has a long-term course, rather than changing every couple years with a new President. Let's all set tough goals to work towards. We can do it.
 

Thedrewbert

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Why is it never mentioned that even if we do cut spending, we MUST keep taxes high in order to pay down the deficit? We must be taking in more in tax revenue than we are spending.... simple math. So that means taxes are going to have to go even higher
 

KTF40

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Why isn't the Republican party listening?
23 Polls Say People Support Higher Taxes to Reduce the Deficit



23 Polls Say People Support Higher Taxes to Reduce the Deficit | Capital Gains and Games

Cause Democrats are the party that makes decisions based on poll numbers and how they can get the most votes.

Let's simplify this debate

Current revenues are about 15% of gdp (keep in mind, unemployment also plays a role in why this number is so low). Historically, it is about 18%. Bruce Bartlett: Are the Bush Tax Cuts the Root of Our Fiscal Problem? - NYTimes.com

Current spending is about 25% of gdp and is expected to increase significantly in the coming years. Historically, it is about 20%. PolitiFact | Rand Paul says federal spending has risen to 25 percent of GDP

With that said, it seems quite clear that we have both a revenue and a spending problem. However the bigger of the two issues is clearly government spending. Even if you were to decrease unemployment to normal levels and eliminate the Bush tax cuts upon the rich, you would make no real progress in solving our debt problems as we would still be running on a deficit. Even if you cut discretionary and military spending in a reasonable fashion, you're still not making any progress. The only way to make progress is to reform the major entitlement programs which make up the majority of our fiscal budget. All that other stuff comes second.
 

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With that said, it seems quite clear that we have both a revenue and a spending problem. However the bigger of the two issues is clearly government spending.

Fully agreed that there are two parts to the problem. The bigger is indeed spending, but a big part of this is spending on debt interest, and this is something the USA is pretty much stuck with.

IMO taxes have to go up, and go up well in excess of the worst nightmares of most in the USA. The type of tax that will do most to raise revenue while choking off the least demand is sales tax. Think European levels, ie 20-25%, with tax on gas taking its price up to European levels, around $10 per gallon. At the same time the USA needs cuts well in excess of the worst nightmares of most. The defence budget is bigger than any other nation on earth and has to be cut. The key is BOTH more tax rises than any Democrat dare suggest and more cuts to revenue than any Republican dare suggest. At the moment both US political parties are telling voters what they think voters want to hear.

Plan B is quantitative easing, devaluation, inflation. I think this will be a big part of the solution precisely because politicians won't tell their voters the truth and will be forced into it. But it will destabilise the US$ - it is messy.
 

D_JuanAFock

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Fully agreed that there are two parts to the problem. The bigger is indeed spending, but a big part of this is spending on debt interest, and this is something the USA is pretty much stuck with.

IMO taxes have to go up, and go up well in excess of the worst nightmares of most in the USA. The type of tax that will do most to raise revenue while choking off the least demand is sales tax. Think European levels, ie 20-25%, with tax on gas taking its price up to European levels, around $10 per gallon. At the same time the USA needs cuts well in excess of the worst nightmares of most. The defence budget is bigger than any other nation on earth and has to be cut. The key is BOTH more tax rises than any Democrat dare suggest and more cuts to revenue than any Republican dare suggest. At the moment both US political parties are telling voters what they think voters want to hear.

Plan B is quantitative easing, devaluation, inflation. I think this will be a big part of the solution precisely because politicians won't tell their voters the truth and will be forced into it. But it will destabilise the US$ - it is messy.
Gas prices in the US can not, and will not, hit the EU prices of $10 a gallon. Why? Because the average americans commute is twice as long as the EU's and we dont have a substantial public transportation system for most of the country.

The average driving distance for somebody in the UK, the country with the longest commute in the EU, is ~8.5 miles (BBC NEWS | UK | UK commute 'longest in Europe'). Meanwhile, the average american drives 16.5 miles to work (Money: New benefit: help with commuting costs - US News and World Report). Additionally, there is generally a LOT less shops and groceries within walking distance of your home. Having gas at $10/gallon would mean the average low income person will be spending roughly 1/3 of their paycheck on gas each week, if not more.
 

dandelion

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Gas prices in the US can not, and will not, hit the EU prices of $10 a gallon. Why? Because the average americans commute is twice as long as the EU's and we dont have a substantial public transportation system for most of the country.
You have this back to front. The reason the commute distance is twice as big is because gas is half the price. People take this into account when deciding where to live and work. Its win-win. The government gets more tax, the people spend the same because they are only travelling half as much, they spend less time doing it and use less imported gas.

The average driving distance for somebody in the UK, the country with the longest commute in the EU, is ~8.5 miles (BBC NEWS | UK | UK commute 'longest in Europe'). Meanwhile, the average american drives 16.5 miles to work
This depends what you are talking about. 10 million people out of 60 million live around and work in London and most travel to work on public transport, not by car. The distance issue is mainly a time one. From where I live, people still commute the 50 miles to London, by train. At one time a lot of railways in britain were closed down, but those that survived have boomed with modern commuting. Outside London and its influence, public transport has been greatly in decline and still is, people travel by car.

Additionally, there is generally a LOT less shops and groceries within walking distance of your home.
Yes, but this is just organising things assuming cheap car transport. What happened before cars?If gas prices go up people will adjust. All the more reason to get started on this process, becuse it is inevitable anyway.

The key is BOTH more tax rises than any Democrat dare suggest and more cuts to revenue than any Republican dare suggest.
Except that republicans are not necessarily in favour of revenue cuts in their favourite areas, and equally democrats also have views on what it is appropriate to tax. The present situation is a tacit compromise between the two not to cut spending and not to raise taxes. Also, on health care at least, The US free market system is ridiculously expensive. Hard to say whether this same 'bells and whistles' approach to the military might be justified by a requirement to have a capability greater than the UK (ie to invade countries), but each serviceman seems to cost the US twice as much as the UK.
 

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You have this back to front. The reason the commute distance is twice as big is because gas is half the price. People take this into account when deciding where to live and work. Its win-win. The government gets more tax, the people spend the same because they are only travelling half as much, they spend less time doing it and use less imported gas.
Not necessarily. The farther away from the city, the less expensive the place is to live. If you force people to live closer, then rent becomes more expensive both because of a sudden increase in market demand and because there wont be enough supply. Additionally, what do you propose be done for those that are just stuck living too far away because prices rose too quickly and now nobody wants their property?

This depends what you are talking about. 10 million people out of 60 million live around and work in London and most travel to work on public transport, not by car. The distance issue is mainly a time one. From where I live, people still commute the 50 miles to London, by train. At one time a lot of railways in britain were closed down, but those that survived have boomed with modern commuting. Outside London and its influence, public transport has been greatly in decline and still is, people travel by car.
"It said seven out of ten people outside London travel to work by car..."

What you are talking about here though is like looking at New York City here in the states, sure there is one location where public transportation (or walking) is the primary method of getting to/from work. Problem is, at least for the US, most dont have the opportunity to commute in such a way, while there apparently is a way in the UK (which is my primary argument about gas prices being unable to rise to the same as in the EU)

Yes, but this is just organising things assuming cheap car transport. What happened before cars?If gas prices go up people will adjust. All the more reason to get started on this process, becuse it is inevitable anyway.
The problem is, this country is built around cheap car transport. We have been building and maintained this way of life for the last hundred years. All of our cities, residential areas and places of business are organized around it. There is no feasible way to change that without it being a horrible situation. If you make gas $10 a gallon and argue for restructuring... what are you going to do with the massive rise in unemployment because many places are going to shut down? Entertainment, travel, housing, everything would be a giant mess and it would take decades to fix.

There are lots of people already struggling to get by without having to pay 3x the cost to travel to and from work.