A few major tweaks could make this more appealing;
* Allocate 50% of the gas/jet fuel tax towards mass transit, the rest to offset income tax
* Allocate 25% of the carbon tax to lower income citizens to offset the regressive nature of the tax, allocate the rest to offset income tax
* Ditch the mortgage annulment for existing homes or institute 'penalty'. However, implement it for large houses constructed after 2007.
* Exemption for agricultural diesel fuel only (phase in for all others)

(NOTE:  The article text had considerable additions from an unattributed source or sources without any consultation with me.  I have tried to label these additions to distinguish them properly, though I do not know how they should be attributed.  Perhaps the editors will fix that detail; in the mean time, please re-scan the article proper to see which material is properly mine and which is not.)

As I see it, the problems with Dingell's proposal are much, much worse:

1. The vast majority of citizens would just see less disposable income.
2. The programs "helped" by this initiative would see a declining income stream even under the best outcome, as efficiency and conversion reduced the taxable fuel use.
3. At worst, the costs could result in a recession or (if assisted by e.g. the collapse of mortgage lending and the construction industry) a depression.
4. The refusal to tax diesel aggravates the perverse incentive to convert petroleum into subsidized biofuels even at negative efficiency.

This appears designed to be D.O.A. on the House floor.

It would be much simpler and better to tax the fuels (without exemptions for any fuel) and use the full amount to give every legal worker, pensioner, etc. a zero-bracket amount on their employment taxes (or the equivalent for retirees):

• The net effect on government revenue would be zero; there would be no criticisms about creeping socialism or tax-and-spend liberalism.
• Individuals could actually improve their net income by being more efficient.
• Individuals would have additional income to spend on efficiency measures.
• There would be no fiscal impact on government programs as the fuel-tax revenue declined.
• There would be no problem of the government picking winners; any effort which reduced the consumption of fossil fuel would "win", regardless of how it was accomplished.
• The restriction of rebates to legal workers would tax under-the-table and illegal alien labor while benefitting the taxpaying public.

These ideas have been out there for a while.  I find it hard to believe that Dingell could not know about them.  For him to produce a proposal at such great variance from it says that his objectives are very different, and I doubt very much that I would ever endorse them.  We need to close the Hummer dealership on Telegraph, not promote it.

(before you ask "why a zero-bracket amount and not a flat per-capita rebate":  I think people who only work a trivial amount should only receive a trivial fuel allowance, and proportionality up to a point is a good thing.)