You could restructure all externalities taxes to pay a dividend back out of what they raise, but you could instead skip a step and use the money to reduce the a

You could restructure all externalities taxes to pay a dividend back out of what they raise, but you could instead skip a step and use the money to reduce the amount you need to raise via other taxes. Presumably your general-purpose tax is structured some way that's more efficient than having everyone to pay an equal share, so this is a more efficient option. But if externalities taxes + dividends are politically expedient then so be it. It sure beats never regulating externalities.