The rest us used in agriculture and things like plastics and the like.
Correction: it is used in agriculture, heating and cooling.
Part of the idea is to create extra incentive for insulation. Carbon neutral houses exist, but currently there isn't enough insentive.
As for agriculture: yesterday I heard about a farmer who decided to save money, by going back to new technology. Given the current price of gassoline, (80$ a day for a tractor) he started using muels where ever possible. Imagine the savings.
Government has one good reason to get involved in all this: political independence. Another good reason is that the government can, in some situations, take long term action to ensure the greater good of people in the future. This is what I'm trying to say: there are certain doctrines that need to be requestioned, taken within context, and not be taken as axioms of truth in all circumstances. For example, in my proposal, government takes steps to take political freedom, but it also gives freedom to it's own people to choose how to use their buck, since the income tax rate would go down as a function of the carbon tax goes up.
As for work, people for whom it is still worth while to go to work by car will do so. But at a certain point, companies will start re-organizing themselves in a way that allows their employees not to need so much carbon. (solutions exist, such as professional car pooling, where companies will have little mini-vans catering to the different living areas, or companies breaking themselves up into units near where it is affordable for their employees to work, etc.)
Sure, the rise in gas cost is already making some progress, but the people currently benefiting from the rise are the Saoudis, not the American tax payer. It should be the other way around, if anything, just for political freedom.
By the way, I'm not in favor of "forcing" any body into things (such as bike use) I prefer to leave it to the individual's choice. (And I do consider 4 miles the limit in biking distance). But I'd like to point out as a side remark that a few decades ago, pictures of streets in china showed massive bicycle use. Today, obesity is one of the fasted growing problems never seen before in china, and if you look at the pictures of the streets, the cars have replaced the bikes.
