That's actually kind of genius. Domain squatting is highly automated, so in most cases it's not hard to figure out when a domain is squatted rather than simply inactive. Taxing squatters 10% of their sale offer every year would make them think twice.

It could even be done through the registrars: for every year you hold onto a domain, the registrar withholds another 10% if/when you sell it. Legitimate companies and people wouldn't suffer, since they would want to keep their domains more or less forever. Those looking to flip domains would have to consider their diminishing returns.