The Coming Tax Hike

Intrade now lets people bet on future marginal tax rates. The top marginal tax rate for the federal income tax, which is now 35 percent, is expected to rise. Here are the current probabilities for the top rate in 2011:

P(top rate equals or exceeds 38 percent) = .87
P(top rate equals or exceeds 40 percent) = .33
P(top rate equals or exceeds 42 percent) = .18

Notice that there is a one in three chance the rate will exceed the level that prevailed under President Clinton.