You are trying to convince your state government to reduce its incredibly high business taxes in an effort to promote the economic climate of your state. Your government officials respond by saying that reducing business taxes will cause tax revenue to plummet and the state can’t afford to reduce tax revenue at this time. You point out to the government officials that according to the Laffer curve you studied in economics class.

a. the politician is right, lower tax rates always lead to lower tax revenues so taxes should not be reduced if the state can't afford
b. changes in tax rates are always offset by increases in the tax base so that there is no effect at all on tax revenues
c. when tax rates are high, a rate reduction may lead to an increase in tax revenue as it will encourage more tax paying businesses to locate in the state.
d. tax revenues are likely to decrease, but the government will just decrease spending to offset these reductions.