I really don't think eliminating domain squatters is some impossible task. you could probably just tax sales of domain names to death (90% sales tax on any resold domain names) to disincentivize it vs registration upkeep costs.

Squatters are a massive blight on the internet.

The problem goes way beyond domain squatting. You have a limited resource, say nissan.com, and you have several valid claimants. Who gets to decide what's fair? First past the post? Heaviest pocket book? Biggest stick? Popular acclaim? ...

Is not unique to domains, this is why the world is uts.

I don't intend to solve this problem entirely, just to displace this business model of squatting domains, which is a massive waste of domain space.

First past the post is "good enough" for me if the intrinsic value of the domain to you is greater than the domain registration fee of like 3-10 bucks a month.

There shouldn't be a major reselling market, that would be like if the majority of space in the yellow pages was just advertisements that said "your business ad here!"

Make the transaction in a country that doesn't have such a tax?

The tax would be done by the registrar or ICANN or whatever (although throwing more money at them might increase corruption of their bureaucracy, oh well). You could burn the money for all I care.

If you get caught, the domain is blacklisted. Ownership transfer is public, so there is little incentive for buyers to go with this route.

Do they or even should they have the authority to demand that people correctly report the prices they trade domain names for?