You're probably thinking of Prop 13, which, no argument. But I don't think the fix is as straightforward as you imply. (TLDR the biggest problems are due to corporate landowners, not families who own a single dwelling.)
Also, what jurisdiction are you aware of that takes un-accepted real estate offers into account for tax purposes?
At least where I live (California US), that's not true. There are certain things which trigger a change in taxable value, but they're mostly only indirectly connected to appraised value. Un-accepted offers 100% definitely don't factor in and (for reasons already argued by others on this discussion) would probably cause more problems than they would solve if they _were_ taken into account.
Just to be clear, do you believe milk.com is being squatted on right now? Should its registrant morally pay more than the default annual registration cost?
If so: How does consistently using a domain (any domain) for literally 30 years (as of a week ago) for a personal website and an email address constitute "squatting?"
Please note that there is a significant time cost (both senses) switching one's email address. Speaking personally, I have found some organizations are effectively incapable of updating an email address in their systems, at least not on the first N attempts over the course of M years.
People pay registration fees every year for domains. How is what you propose different than registrars setting different fees for different domains? Or: What entity should be entitled to the tax, and why?
I know of no truly serious offers for the domain, but why should that matter? I'm pretty sure residences aren't taxed based on un-accepted offers, for example.
In what way is he actually speculating or rent seeking? He has a real website on it — not just a placeholder — and he's got DNS MX records, so it's presumably actively used for email.
My read on his "value" page is that he doesn't actually want to sell. Assuming he just wants to keep using the domain for his personal site and have the same email address he's had since 1994, would that make it okay for him? Would that still somehow be immoral rent-seeking? What makes those uses of the domain "impractical?" Who is he morally obligated to give or sell the domain to, and if it is to be sold what is a fair value that wouldn't make it "rent-seeking?"
In what way does that apply to milk.com? Is the owner seeking to get wealthy from it? And if so, is he also somehow failing to create sufficient wealth in the process?
What should he be doing differently right now to not fall on the wrong side of the line?