That only works if you're good at recognizing the bottom 10% and have tight anti-cheating controls. Otherwise, things will go straight to hell. Also, you're neglecting the fact that it'll destroy cooperation among the teachers, because it turns things into a "it's either him or me, and it's not going to be me" scenario. Neither effect is conductive to a better or more effective school environment.
While the idea of firing bad teachers has a lot of merit, handling it in such a way is a terrible idea. That's the sort of quick fix bad managers come up with and one of the ways bad managers can help destroy an entire organization.
But it's a lot easier to give out fixes like these than it is to understand problems, so such ideas are remarkably prevalent. That probably explains why the change X by Y% mentality is lampooned in so many Dilbert cartoons.