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From The Socialist newspaper, 7 June 2007

The fat cat and the 'cleaning lady'

NICHOLAS FERGUSON is chairman of SVC Capital, the firm that built Europe's biggest private equity fund, "almost from scratch". In a Financial Times interview, Ferguson criticised the fact that top executives involved in highly profitable debt-financed corporate buy-outs "pay less tax than a cleaning lady."

Private equity partners earn most money from, typically, a 20% share of any profit from selling companies. "Taper relief" rules allow the tax paid on this income to be as low as 10% provided that the private equity firm holds the company for two years.

"Any common sense person would say that a highly paid private equity executive paying less tax than a cleaning lady or other low-paid workers, that can't be right," Ferguson commented. Very 'common sense' of you, Fergie.

Workers might not agree with his solution, however. He says any proposals must not affect private equity's 'vital' role in the economy. He wants the profitable schemes without the unpopular bits.

But private equity companies operate purely to bring short-term profits and frequently practise asset-stripping, job destruction and wage-cutting. What bits of private equity corporations are 'popular', except with fat cats?

The firms also go in for pension fund dismantling (the GMB union says nearly 100 pension funds have collapsed after a private equity firm's takeover and temporary liquidation of the targeted company). The state then may take responsibility for the pensions but the private equity fat cats pay next to no tax to the government!

Ferguson wants to change only the tax rate and that marginally. We would say that the private equity conglomerates should be nationalised with compensation only on the basis of real need. For socialists, it's just common sense.

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In The Socialist 7 June 2007:

Labour cheats NHS

PFI - a licence to print money

Petition on NHS: Stop cuts and privatisations (word)


War and terrorism

Fight Brown's agenda of war, cuts & privatisation


Socialist Party workplace news

Postal workers fight closure

Coventry says 'keep our Post Office open'

CWU delegates attack link with Labour

Come to the Shop Stewards' Network conference

National Shop Stewards Network Founding conference

Ritzy - low-paid workers strike again


G8 Summit protests

80,000 demonstrate against the G8 summit

Activists with ideas


What we think

Drowning in an ocean of debt


Socialist Party feature

Young people: a bright future... or different shades of grey


International socialist news and analysis

Bolivia: Release Adam Ziemkowski

South Africa: Public sector workers in mass fightback

The Arab-Israel 1967 war: repression and bloodshed continues


Socialist Party news and analysis

Don't trust the Trust schools - organise!

Tony Blair "brings church into school"

Weekly bin collections AND recycling schemes

Black and Asian group: Socialist ideas to unite all workers

Take part in the 22-28 June Fighting Fund week of action

The fat cat and the 'cleaning lady'


Workplace news and analysis

Remploy management squander opportunities

Tesco strikes show new mood


 

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