Automate creation of taxonomy terms for use with migration module
depends when you want to create them, in a new site or importing them into an existing one? 

If you're building an install profile you could write an install script to create the taxonomy and terms as you need.

If you're trying to export/import into existing sites then it might be a bit harder.

features can't export taxonomy terms by itself because they have sequential ID values and so don't have a UUID that can be safely ported across sites.

that said, there are other modules out there helping to fix that problem - http://drupal.org/project/uuid is somewhere to start your research. Fair warning, you might have test a few patches for existing modules to get the solution you're after..