Imagine that your tabs were actual tabs on a manila file folder, sitting portrait-wise in a filing cabinet.

As a rule of thumb, text is better read when it’s upward.

EXCEPT on book spines, because the logic is it runs as though the book were flat on a table — which is to say, upward. I think oldnick's logic makes a similar kind of sense.

EXCEPT on book spines
Not so fast:
http://typophile.com/node/65375

Book spines with the text lengthwise give me such a crick in the neck.

I would prefer them to read with the baseline outwards, because looking over the document or binder cover and content in order to read the tabs is awkward, especially if it is wiro-bound or a looseleaf folder as the pages will creep out to hide the tab.

Tim