A recent study from the Pentagon’s favorite consulting firm found that raising taxes — particularly on corporations — could dramatically reduce the federal deficit and safeguard the economy better than President Donald Trump’s inflationary and chaotic tariff policies.

While the European Union suspended its trade deal with the United States over the future of Greenland’s sovereignty, Trump boasted to political leaders at the World Economic Forum in Davos this week that sweeping tariffs, implemented by his administration in 2025, “radically reduced” the US trade deficit. Throughout the last year, the president has argued that tariffs will “lower our debt, which is a national security thing” and pay for, well, everything — even repeatedly claiming that increased tariffs may soon eliminate the need for federal income taxes.

But researchers at the defense-focused RAND Corporation, a leading Washington, DC, think tank and top policy adviser to the Pentagon, recently determined there are potentially more effective ways than tariffs to balance America’s books and reverse the US budget deficit — which they previously deemed a national security concern.

While Trump’s aggressive tariffs may dramatically increase revenue, they stifle economic growth by spiking production costs while lowering consumption rates, researchers conclude. “These adverse impacts on economic activity can impair the government’s ability to raise future revenues from all tax channels,” they contend.

The Congressional Budget Office, Congress’s economic research arm, finds that Trump’s aggressive tariff regime, if it lasts, could reduce the budget deficit by $3 trillion, including interest obligations, over the next eleven years. But this barely makes a dent in the US government’s debt burden. Baseline projections estimate the federal government will pay roughly $53 trillion in interest payments alone in the next thirty years, coming to represent a 156 percent debt-to-GDP ratio by 2055.

What’s more, as was highlighted by the University of Pennsylvania’s Annenberg Public Policy Center, Trump’s One, Big, Beautiful Bill Act alone could increase the national debt by an estimated $3.4 trillion over the next decade — meaning tariff revenues won’t even fully cover the Trump administration’s own contributions to the deficit so far.

A potentially better revenue-maximizing measure? Raising taxes on corporations, according to the RAND study. RAND researchers suggest there’s ample ability to do so, thanks to a dramatic shift of the tax burden from businesses to workers over the last seven decades. In 1950, corporate and excise taxes accounted for more than half of all federal revenues, eclipsing contributions from workers. But by 2024, businesses contributed just 11 percent, while workers (through their payroll and income taxes) accounted for 83 percent of federal revenues.

This imbalance isn’t because corporations don’t have the dough; after the 2008 financial crisis, corporate profits rose to 9 percent after maxing out at 7 percent over the previous six decades. “Thus, despite an increase in corporate profits, revenue from corporate taxes has remained near the lows of the past eight decades because of lower effective tax rates,” researchers pointed out.

While noting possible chilling effects to the economy, including in sales, profits, investment, and employment, the study contends that “current top corporate marginal income tax rates are below the revenue-maximizing rate” — meaning there’s still room to raise levels without disrupting economic activity.

According to a study cited by RAND, recent corporate tax cuts have mostly benefited the rich. For every $1 reduction in corporate tax revenue generated by the first Trump administration’s Tax Cuts and Jobs Act of 2017, economic output increased by $0.44 — with a stunning 78 percent of gains “flowing to the top 10 percent of the income distribution.”

“A modest increase in the corporate tax rate . . . could be a meaningful step toward reducing the debt burden,” researchers observe, adding that “broadening the tax base by closing loopholes in the corporate tax code and increasing the minimum tax rate on foreign earnings for US multinationals could raise significant revenues.”

Experts have long claimed that doing otherwise could have far-reaching risks.

In 2012, the Brookings Institution, a Washington, DC–based think tank, warned that the rising debt and consequent underfunding of services for working-class Americans are “the real national security threat,” and that underinvestments “will make an isolationist or populist president far more likely.” Additionally, just this week Trump’s Homeland Security Department issued a memo stating that people with “class-based or economic grievances” are a national security threat.

War hawks, aligned with the nation’s budget hawks, have long called the United States’ national deficit an important national security issue, hamstringing the federal budget for war expenditures, threatening the stability of the US economy, and intertwining the United States’ economic and political sovereignty with foreign nations.

In a 2017 report criticizing the risks of the growing national deficit, a RAND researcher highlighted the Congressional Budget Office’s own concerns about how the United States’ growing national deficit could threaten national security: “A large debt also can compromise a country’s national security by constraining military spending in times of international crisis or by limiting its ability to prepare for such a crisis.”

Above all, raising personal income tax rates is “likely the most potent channel through which the additional revenues necessary to pay off the debt can be raised,” according to the RAND study. RAND researchers do not specify who exactly should face these tax hikes — but they do note that a “nonuniform tax increase can be considered to lessen the distortionary impacts on economic activity.”

In a statement submitted after publishing, RAND researchers told the Lever that “Our study was focused on the possible revenue, spending, and growth channels that could pay down the debt rather than the impact of specific mechanisms like tariffs or higher corporate tax rates. We did find that there are economically feasible ways to reduce the debt through some combination of economic growth, spending cuts, and tax increases. Paying down the debt, however it is done, would reduce cumulative interest payments by tens of trillions of dollars over the next thirty years. While this study did not model the impact and tradeoffs of specific mechanisms, the RAND Budget Model Initiative is building the tools to do so.”