There is a 180% tax on cars in Denmark which is a pretty major disincentive for driving a vehicle. I have a friend who bought a used VW Passat wagon (5 or 6 years old) in Denmark for $90,000 USD.
Having cycled Copenhagen, I have to say it's wonderful. Everyone is on bikes all the time, and the city always prioritizes bicycles over other vehicles. I'd love for the same to be true in Palo Alto, but realistically a high vehicle tax would have to be done at a state level. The problem is that California is so diverse, that there is no way a farmer in Fresno or Bakersfield is going to be able to handle a large auto tax.
The only way we're going to be able to get people out of cars here in the Bay Area is to increase spending on cycling infrastructure, as well as transit. Thankfully with cycling infrastructure, many cities, including Palo Alto, are finally getting serious about making more bicycle boulevards and bike lanes. For a long time cities in the Bay Area have either just payed lip service to the idea, or have been mired in red tape so that they couldn't roll out new cycling infrastructure without an environmental review.
On the transit front, I'm not so optimistic. There's just such a quagmire of competing transit services in the region, that it's impossible to get any kind of a cohesive system together. Either you have a central authority which dictates the entire route map which will tend to neglect various regions, or you get what we have now which is hyper-localized transit authorities which don't service the needs of the region very well. As a result, companies just implement their own systems (ala Google, Facebook, Apple, Box, etc.) which are exclusionary and have become icons of gentrification.