A carbon tax is a tax on the emission of carbon dioxide. Some economists and policy makers believe that taxing a negative behavior, such as emitting carbon dioxide into the atmosphere, will discourage such behavior. A carbon tax is a direct policy approach to reducing the amount of carbon in the atmosphere, as opposed to a market-based cap-and-trade approach. This kind of tax is one method that can be used to reduce the amount of carbon emissions, which lead to global warming and climate change.
 
As a result of a government instituted carbon tax, a power plant, for example, would have to pay a certain dollar amount in proportion to how much carbon dioxide it produces.  Many Western European countries have already implemented carbon taxes, while others are still in the process of discussing the costs and benefits.  The United States has not yet instituted a federal carbon tax, though some cities have done so on a local level.