For whatever reason the pagination isn't working here, and that i can't understand why.

<?php

    if ( get_query_var('paged') )
    $paged = get_query_var('paged');
    elseif ( get_query_var('page') ) 
    $paged = get_query_var('page');
    else 
    $paged = 1;

    $post_type = 'portfolio';
    $tax = 'type';
    $tax_terms = get_terms($tax);

    ?>

    <?php 

    //print_r($tax_terms);
    if ($tax_terms) {
    foreach ($tax_terms as $tax_term) {

    $args = array (

        'post_type' => $post_type,
        "$tax" => $tax_term->slug,
        'post_status' => 'publish',
        'posts_per_page' => 2,
        'caller_get_posts'=> 1,
        'paged' => $paged 

        );  


    $my_query = new WP_Query($args);


    ?>

    <?php if ( $my_query->have_posts () ) { ?>

    <?php while ( $my_query->have_posts () ) : $my_query->the_post(); $count++; global $post;  ?>

    <?php include (TEMPLATEPATH . '/_framework/includes/portContent.php'); ?>      

    <?php endwhile;?>

    <?php }  ?>

    <?php }  ?>

    <?php }  ?>

   <?php if (function_exists("pagination")) {
    pagination($additional_loop->max_num_pages);
    } ?>

Any ideas?

Do this:

   $paged = (get_query_var('paged')) ? get_query_var('paged') : 1;