There are different types of taxes and different purposes for changing taxes. Often the purpose of a tax is simply to raise revenue for the government and its activities of providing public goods and subsidizing goods that yield positive externalities. Sometimes, however, the purpose of changing the taxing and spending behavior of the government is to help stabilize the economy. In subsequent modules, we will discuss important macroeconomic variables and how they can help gauge macroeconomic health. We will also look at what is called Fiscal Policy, which is the deliberate use of the spending and taxing powers of the government to achieve macroeconomic stability. For example, if the economy is going into a downturn, discretionary fiscal policy would recommend tax cuts and/or greater amounts of government spending. Of course, this brings in other issues of concern, such as the budget deficit and national debt.

For now, research some instances in U.S. economic history when there was some change in a tax. If one views a transfer as a reverse tax, where payment flows from the government to households and businesses, the Economic Impact Payments of early to mid-2020 (also known as the "Stimulus Checks") can be seen as an example. These transfers were made in order to soften the economic blow of coronavirus restrictions and were part of a greater Fiscal Policy response to a sudden economic downturn.

Discuss at least two examples you found of a change in a tax. First, explain the tax itself, and then the change that occurred. What do you think was the main reason for this tax change? If enough time has passed, can you assess the impact of this tax and the change? Did it achieve its purpose? Why or why not? How did the change affect the deadweight loss associated with the particular tax?