39. LO.6 State A enjoys a prosperous economy with high real estate values and compensation levels. State

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39. LO.6 State A enjoys a prosperous economy with high real estate values and compensation levels. State B’s economy has seen better days—property values are depressed, and unemployment is higher than in other states. Most consumer goods are priced at about 10% less in B as compared with prices in A. Both A and B apply unitary income taxation on businesses that operate in-state. Does unitary taxation distort the assignment of taxable income between A and B? Explain.

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