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One variant on this that might work better would be to have a tax on capital -- not capital gains, but on capital itself above a certain amount. It'd help fund the gov't while reducing the tax burden on normal folks, which in itself would stimulate the economy and, yes, possibly cause inflation.
I don't know if a capital tax is a good idea or not. But personally, I think accumulated wealth is a positive force only when it's being used to create new wealth and resources, not simple to redistribute money from one pocket to another or speculate in assets or resources.
There was a science fiction writer back in the '60s name of Mack Reynolds who was an old socialist and political thinker, and he wrote a series of novels based on the advantages and disadvantages of every possible form of society he could see he U.S. moving towards -- meritocracy (the more $$$ you have, the more votes you have), the capital-tax society, several variations on the super-welfare state, an Internet-centered society with state control (back in the '60s, yep), and more. He wasn't exactly a great writer, but the ideas were good and the presentation of advantages/disadvantages was pretty even-handed. In Reynolds' worlds, there was never a utopia or a perfect answer. All of his worlds had a crummy side, and that's where his protagonists usually lived. If you ever see his stuff around, it's worth a look.
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