The Golf Club by John Harrison
Dave and Tony decided they wanted to join their local golf club, and so they both filled out the application form. The form asked a lot of personal questions about their life, job, income and other interests. And then they waited. It was good news for both of them.
Within a couple of weeks, they received letters saying they’d been accepted for membership. Dave was delighted. Not only had he been accepted, but he was informed that because his income was around about average for the clubs 1,000 members, he would pay just £200 a year. Tony was also thrilled to be accepted, but was a bit taken aback by the fee. He was told that there were only 9 other members who earned as much as he did, and because of that he would have to pay almost £8,000 a year – 40 times what Dave was paying.
He asked what he would get for the extra money…preferential teeing off times, a discount in the restaurant or maybe his own parking space? Nothing was the answer. The price was linked to his earnings and the money would all go towards running the club for all its members.
Tony considered going and joining another club – he knew of several others that were a lot cheaper – but he liked this particular club, and he had friends there. And so he decided to join.
For a while he was reasonably happy – yes he was paying a lot more than everyone else for exactly the same facilities (in fact he used the facilities less than most because he was so busy) – but he considered it a price worth paying. He felt good about making a big contribution, and helping his friends to enjoy better facilities than they would have without his help, but then everything changed.
Some of the members started to complain, and believe it or not, they started to complain that Tony and the nine other successful members weren’t contributing enough to the running of the club. They weren’t paying enough! Tony just couldn’t understand this at all. Between them, they made up just 1% of the membership and were already paying almost a third of the running costs. And the most vociferous critics of all were some of the poorest members who had been allowed to join the club and benefit from all its facilities, for nothing! How could members who were being allowed to play for free say that Tony wasn’t paying enough?
These members demanded that Tony and the others should pay even more. Despite the fact that they were already paying 40 times the subscription of the average member, and over 100 times the contribution of other members for exactly the same facilities, they decided that this wasn’t enough. They had more money and they should give it to the club.
With a heavy heart, Tony weighed up all his options.
He could go along with the majority – who were in favour of him paying more because it would benefit them and wouldn’t cost them a penny – and pay up. He considered this briefly, but if he was honest, he’d have to admit that he was quite angry now. He’d already been paying vastly more than anyone else, because he was comparatively well paid, and now people were demanding more. Nobody had given him the money. He’d worked hard for it. He didn’t mind paying his share, but now he felt like he was being penalised and punished for his success. There was no other rational explanation.
So what would he do?
Well one option was to leave and join another club. There were plenty of others that would welcome him with open arms and would charge him a lot less money to be a member too. The weather was a lot better on some of these other courses as well! He wasn’t sure whether to go or not, but he spoke to the other members of the ‘terrible ten’, and half of them were thinking about it. For every one that left, the club would lose the equivalent of 40 members fees. But it was even worse than that.
You see, these ten as you might expect, were pretty switched on and able individuals. They were heavily involved in the organisation of the club and its revenue raising activities. In fact between them, they were responsible for generating almost all the revenue coming through the club which all members benefited from. So aside from losing their big membership fee, the loss of each of these key members would deliver another massive hammer blow to the clubs funds.
Tony saw leaving as a last resort though. He had a couple of other ideas to try first. He knew that the high membership fees (and the demands for even more) were purely a consequence of him earning a sizeable income. He’d accepted this while demands were reasonable, but now they weren’t. The rules of the club meant that once he was a member, if he had little or no money, he could still play and enjoy all the facilities for next to nothing.
He’d heard about legal ways you could use to reduce the amount of income it appeared you were earning, but couldn’t be bothered with them before. But now he went to see a fancy accountant who told him that with a bit of nifty paperwork, not only would it stop club members demanding he pay more, but he could actually end up paying nothing at all.
He pondered the fact that if all the club members paying high fees did this, the club would lose 30% of its revenue overnight, and they’d need an extra 400 members to replace it. “Why give people a hard time who are so critical to your survival and prosperity?” he thought.
While he was thinking that, another idea came to him. To hell with it! He liked playing golf. That’s why he’d joined the club. But he worked hard and didn’t have as much time to play as he’d have liked. Paradoxically, the amount of time and effort he put into working was making his use of the club facilities more expensive. The harder he worked, the more expensive the facilities became, and the less time he had to use them! So if he worked less, he’d have more time to play and his membership fees would plummet. He’d probably never have considered it, but these other members paying a tiny fraction of what he was while using the facilities more, (and still complaining he wasn’t paying enough) had really ticked him off now.
So what would it be:
1. Leave the club, costing it both £8,000 a year and his revenue raising skills.
2. Employ a fancy accountant to work his magic, costing the club the thick end of £8,000 a year.
3. Cut back on work, costing the club a fortune and putting additional strain on its facilities.
4. Continue to be taken advantage of by people who didn’t appreciate, understand or respect his contribution.
He knew he’d have to do one of the first three. All would cost the club money (some a great deal of money) and it was all because he’d been pushed just a little bit too far.
It’s an interesting dilemma isn’t it? And purely by coincidence (!) here are some more facts and figures which now I think about it, might cast some light on Tony’s situation.
The top 1% of UK tax payers contribute over 30% of the total revenue raised from income tax. They typically pay around 40 times the amount of tax each year paid by an average tax payer. They did not, in the main, become wealthy without effort or merit. Their incomes are a direct reflection of the value which the economy places on the contribution they make. Nor do they earn the money which necessitates the payment of such large sums of tax in isolation. In order to do it, they usually create jobs for people who go on to pay their own tax, and purchase myriad products and services which in turn creates and maintains more tax raising jobs. They are the source of a financial ripple which filters right down through the whole economy.
These are the people who huge swathes of the public (and too many politicians who probably know better but feel compelled to pander to the masses) openly say should be paying more – people who are not pulling their weight…people who should be squeezed even drier. They are people who are made to feel that they are doing something wrong – that they are deserving of penalisation or punishment.
Well like Tony at the golf club, they have options…they can take their skills and cash elsewhere, they can legally avoid taxes or they can think sod the lot of you and exchange money for leisure. Treat them reasonably and they’ll do none of the above and we’ll all benefit. But treat them as a sacrificial cash cow to be tethered and milked at every opportunity, and a significant number will take one of the ways out. And when they do that, the economy as a whole is certain to lose out.
John Harrison Streetwise Publications