Betting on Tax Rates

For those still smarting over their lost Super Bowl bets on the New England Patriots, Jason Ruspini has announced the first prediction market in tax rates:

Contracts will forecast the highest marginal single-filer federal tax rates for 2009, 2010 & 2011. I expect trade to be concentrated in the 2011 contracts, as Bush's 2001 tax cuts are scheduled to expire that year, reverting the rate in question from 35% to 39.6%, while the lower bracket rates each increase by 3%. While it is less likely, Congress may also alter the Bush tax cuts for tax years before 2011, but such changes would probably impact 2011 as well.

If reasonable liquidity can be sustained in these markets, I hope that contracts will be added to predict corporate taxes, and other factors that contribute to individual effective tax rates, like the Alternative Minimum Tax and the social security cap.

Here is a snapshot of the market on 2011 tax rates as of 6:15 a.m. EST [click on chart to enlarge]:

(Hat Tip: Joe Kristan & Tyler Cowen.)