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State A enjoys a prosperous economy, with high real estate values and compensation levels. State B's economy has seen better daysproperty values are depressed, and

State A enjoys a prosperous economy, with high real estate values and compensation levels. State B's economy has seen better daysproperty values are depressed, and unemployment is higher than in other states. Most consumer goods are priced at about 10% less in B than in A. Both A and B apply unitary income taxation to businesses that operate within the state. Does unitary taxation distort the assignment of taxable income between A and B? Explain.

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