23 February 2026

Golden age of capital owners

Date

23 February 2026

share

Stefán Ólafsson writes.


There is much talk that the wages of the public have increased a lot in recent months. The Confederation of Employers (SA) regularly complains about this. The Central Bank likewise.


But in all this hype about the wages of the general wage earners having risen too much, generally there is no reference to the development of capital income or property income. These are the earnings that wealthy people receive from profitable assets in stocks, bonds, real estate, savings and private enterprises.


In general, it is the case that the richest people in society receive the largest share of their income in the form of capital gains. The top ten percent of earners, for example, received about 70% of all capital gains in recent years. The highest single percent is with the majority of their income being capital gains. Substantial capital gains, as a rule, flow primarily to the wealthiest in society.


Let's examine how those revenues have grown in comparison with the public's wage earnings over the period from 2020 to 2024. The data comes from Statistics Iceland.

As the image shows, investment income/financial earnings have increased by 172% during this period while wage earnings rose by 50,8%. The investment incomes have, in other words, increased more than three times as much as the wage incomes. For comparison, combined inflation over the period (35,6%) and the increase in household disposable income (52,3%) are shown.


This reflects a great boom period among property‑rich people. Companies have given a lot, investments in securities as well. They are well‑established investors who in recent years have bought a lot of new apartments on the housing market (sometimes whole blocks) to rent out to tourists or others have profited greatly from the housing crisis which eats up the purchasing power of ordinary wage earners and tenants. And those who have been able to put a lot into savings accounts have grown well in the high‑interest environment of the Central Bank. Their interest earnings have increased rapidly due to unique factors of the capital markets.


The role of capital returns in inflation


Perhaps the Central Bank should look to this group that has the highest incomes in society and maintains high consumption and investments that drive up demand-pull inflation. It is not the low-wage workers or the indebted young people who are the main drivers of inflation. The bank's interest rate policy, however, bites most at those with lower incomes and debt – but spares those with higher incomes and more assets. It is a derived and unfair economic policy that also does not deliver sufficient results in the fight against inflation.


In the United States it is the case that the ten percent of the population with the highest incomes are responsible for about half of private consumption in that country. The same applies to the same proportion here in the country. If it is necessary to reduce private consumption to curb inflation, the most effective approach is to reduce the consumption of the higher‑income and wealthier, e.g., by raising taxes on capital income and the highest wages.


In the end, it is also right to note that those who have large capital earnings enjoy large tax advantages, due to lower taxation on capital earnings than on wages. They do not even pay any contribution to the municipalities from these earnings.


Here previously it was considered that people who were capable of working and providing housing for their families were entitled to tax benefits (e.g., in the form of interest subsidies). That was a long time ago. Now most of the tax benefits flow to capital owners who let the money work for them. Such an arrangement undermines work quality and encourages the exploitation of non‑beneficiaries.


The golden age of capital owners since 2020 is due both to a large increase in capital returns and the many tax privileges they enjoy. But above all, such benevolent activity of the state in favor of the wealthiest, which consists of lower taxation on capital income than on wages, is both unnecessary and unfair. In fact, it is harmful because it fuels inflation.


Stefán Ólafsson is a specialist at Efling and emeritus professor at the University of Iceland.

< Older Post

Newer Post >

Efling supports the Matthildur Association

By Freyr Efling • 20. May 2026
Board Efling of the union has decided to fund Matthildi, an organization for harm reduction, with 1.7 million kronur. The Matthildi organization was founded in 2022 and focuses on harm‑reduction services at the early stages of substance abuse. The aim of harm reduction is to help people stay alive, protect their health, both physical and mental, and to empower them in all small steps towards positive change. Matthildi runs the harm‑reduction service Reyk. The service is free of charge for everyone and places a special emphasis on reaching people at the early stages of substance abuse, with the aim of preventing a more serious development of the problem and untimely deaths. In the period from 4 February 2025 to 31 January 2026, Reyk has provided service to 235 individuals on 1,100 occasions. Of these, 25 percent of the clients are employed, and some of them are members of Efling. These individuals struggle with substance abuse as well as poverty and difficult social circumstances. A steady increase in opioid problems has occurred over the past nearly fifteen years. In addition, problems related to cocaine use, crack and methamphetamine smoking have risen steadily over the last decade. It is very important to provide the group facing this problem with harm‑reduction services and support for recovery. The Reyk service is for many the first point of contact for assistance and provides clients with extensive support, follow‑up and connection to social and health services. Matthildi has assisted many in substance‑use treatment, opioid medication treatment and obtaining appropriate social services. In doing so, the organization has helped individuals recover and be able to keep housing, mental health and continue working.

Efling Declares Support for Norwegian partners in Strike Action

By Freyr Efling • 15. May 2026
The board of Efling union approved at its meeting on May 13 a support declaration for strike actions of Norwegian members in the cleaning sector within the sister union Norsk Arbeidsmandsforbund. In the declaration, colleagues in Norway sendr are sent struggle and solidarity greetings. The declaration follows below. The board Efling sends struggle greetings and expresses full support for the strike actions of staff in the Norwegian cleaning sector under the leadership of our sister union NAF. The members of Efling recognize the courage and the great work required to organize an effective strike. The board is also well aware of the necessity to improve the terms and conditions of workers in the cleaning sector worldwide, including in Iceland and Norway. Efling believes in the power of the union and wishes our collaborators in Norway the best possible success in their struggle. Norwegian version Efling expresses support for Norwegian colleagues in strike. The board of the Efling union adopted at its meeting on May 13 a support statement for the strike actions among Norwegian colleagues in the cleaning industry within the sister union Norsk Arbeidsmandsforbund. The declaration includes messages of struggle and solidarity to the colleagues in Norway. The declaration follows below. The board of Efling sends a greeting of full solidarity with the striking workers in the Norwegian cleaning sector, led by our sister union NAF. The members of Efling know what courage and hard work are required to organize a successful strike. The board is also aware of the need to improve the terms and conditions for workers in the cleaning industry globally, including in Iceland and Norway. Efling believes in the power of collective action and wishes our colleagues in Norway the greatest possible victory in their struggle.

The economy: Stagnation until 2028?

By Freyr Efling • 6. May 2026
Stefán Ólafsson writes: The Central Bank is cooling the economy, hoping to bring down inflation. It does this by keeping interest rates high, which bites at indebted households and businesses. However, it does not work on foreign price increases, nor on inflation due to rising housing costs, nor on demand expansion of indebted and high‑income individuals and companies, nor on expansion due to private consumption of a large number of tourists. These measures of the Central Bank have ultimately shown to deliver only limited results and are increasingly extremely unfair in the distribution of burdens. But the Central Bank's method certainly cools the economy, it almost reduces economic growth and increases unemployment. That is the cost of applying the high‑interest policy. Recently the analysis department of Landsbankinn published its economic forecast for the years 2026 to 2028, which assumes growth of only 1.6 to 1.8% over the next three years. That is less than the projected population growth in the country, according to the Statistics Iceland forecast. Growth per capita will therefore be negative. In reality, this means that the economy has entered a stagnation that is expected to continue at least until 2028. This can be seen in the picture below, which shows growth per capita. 
Show more news