replace income tax with revenue neutral carbon tax. Low income families could be subsidized to make this progressive.

Replace income tax with revenue neutral carbon tax i.e. remove income taxes completely and replace them with carbon tax structured in such a way that the same amount of tax revenue is created. If necessary low income families could be subsidized to preserve progressive nature of current tax scheme. This change should introduce very powerful incentive to reduce carbon footprint and at the same time significantly simplify tax code. Many regulations (e.g. CAFE) would become unnecessary - change in energy consumption patterns would be driven by the market. Article in New York Times ("Carbon Taxes Make Ireland Even Greener" ELISABETH ROSENTHAL, December 27, 2012) gives an interesting example how effective such scheme could be.