Peter, you are right and the first step is to just be able to insure against taxes. This is what I'm trying to do over at Intrade:

http://www.intrade.com/index.jsp?request_operation=trade&request_type=action&selConID=575719

I am using the highest federal marginal income rate as a proxy for effective rates. There are other factors that determine effective rates like AMT and the social security cap, and I think we will launch those markets at some point if liquidity builds.

Silas, have you seen this model?

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=263041

Not a new paper, not talked about very much..