Illustration: Dionne Gain Again not surprisingly, such a move would have delivered huge windfalls to high-income earners. Indeed, Treasury's modelling found one of Turnbull's options – abolishing the top rate, reducing the second top rate by 7¢ and increasing the tax free threshold by $4000 – would deliver a millionaire an annual tax saving of $109,000, while delivering a paltry $600 to the average salary earner. Costello was flashing the modelling around in party meetings in an attempt to discredit Turnbull. As a trainee journalist, I lodged a freedom-of-information request to see the modelling. The Treasurer's office soon rang me and bingo: I got my first real exclusive and Costello got his headline: "Turnbull tax plan rewards the rich".

As a backbencher in 2005, Malcolm Turnbull teamed up with an ANU academic to model options for personal income tax rates. Credit:Penny Bradfield Worrying references to tax cuts You soon learn in Canberra that it pays to look an exclusive gift horse in the mouth. But the substantive point remains. Turnbull's paper was unabashedly aiming to reduce personal income taxes, including at the top end. In the paper, Turnbull wrote that his time as chairman of Goldman Sachs Australia only firmed his view that high top tax rates deter internationally mobile workers and global businesses from setting up here. A large discrepancy between the top rate and the company tax rate also encourages smart rich people to set up companies and pass off personal income as company income, to the detriment of government coffers.

The Turnbull paper contains worrying references to Reagan-style tax cuts and the idea that high-income tax cuts end up delivering more revenue from reduced tax avoidance and increased incentive to work. Such ideas have been largely discredited. But there is much worth revisiting in the Turnbull plan and it is a useful indicator of some of his early thinking. Refreshingly, despite the Reagan reference, the paper is not driven by an ideology of cutting taxes to shrink government. Turnbull recognises that an ageing population will mean that society will choose to spend more of its income on health and aged care. Broadening the base Even in an era of mining boom-driven revenue windfalls, Turnbull was looking for "revenue neutral" reform. That is, any tax cuts would be offset by closing other tax loopholes. Economists call this "broadening the base, and lowering the rate". As Turnbull wrote: "A broader tax base and a lower tax rate is desirable for many obvious reasons: more equitable, less complex and more efficient. But an additional reason is that if, in the future, circumstances require an increase in taxation, then a broader base permits the necessary increase in rates to be so much smaller."

Got that? Turnbull recognised that tax revenues may need to rise to fund services. And if so, Turnbull says the best way to go about it is not by increasing rates, but by closing loopholes and broadening the base that taxes apply to. Tellingly, Turnbull's paper makes no reference to the GST. But if his general thinking were applied here, it would mean broadening the base that the GST applies to, rather than increasing the rate to 15 per cent. Closing loopholes So what loopholes to close? In his paper, Turnbull canvassed the proposals of tax economist, John Freebairn, who advocated scrapping the capital gains discount on investment properties, clamping down on work-related deductions and changing the tax treatment of lump sum payments. In an email this week, Freebairn, who also advised the Ken Henry tax review, told me all those options remain viable.

"Tax reform packages involving more comprehensive tax bases, by removing special exemptions and deductions, together with lower tax rates, are smart ways to achieve sustainable revenue, reduce tax distortions and increase national productivity and living standards, simplicity and reduce incentives and rewards for wasteful tax avoidance schemes, and to achieve horizontal equity. There are many opportunities for broader base and lower rate reform packages for labour income tax, capital income tax, payroll tax, GST and land tax." Turnbull had something of a political tin ear a decade ago, so I doubt capital gains tax is still in his sights. But the forest of superannuation tax concessions that has grown up since 2005 cannot have gone unnoticed. Power to reinvigorate debate All in all, we need to hear more from Turnbull on his tax vision. His early work is delightfully frank and open-minded, canvassing all the options and explaining from first principles why our tax system relies too heavily on personal incomes. With the firepower of Treasury now under his control, Turnbull could release publicly all the modelling Treasury has done on the impact of various tax options, so that an informed public debate can be held.

We must hope Turnbull has not become too much of the politician to continue his ambitious tax reform work. Twitter: Jess_Irvine