The system for taxing company profits. Two systems are possible. In the classical system the company is taxed as an independent entity; any dividends have to be paid out of post-tax company income, and are taxed again as the income of shareholders. In the imputation system, company profits are taxed as though they were the income of shareholders, and dividends are not then taxed again. The argument against the classical system is that it impedes capital mobility between companies, as income left in the company where it is earned is taxed much less than income distributed as dividends and then reinvested in another company. The UK used the imputation system until 1999.