I agree that it would increase inequality not decrease it like people would assume a wealth tax (inflation + capital gains tax) would do. The problem I see with the government having their revenue tied to wealth tax becomes incentivized to do things that will make the wealthy wealthier, like maintain a higher rate of inflation.

High inflation has a huge benefit to the government in that the government is a major borrower and inflation reduces the value of their debt.

Absolutely. The US government has the biggest short position on the dollar in history.

They are at the mercy of the privately-owned Fed who could destroy them.

However, fixed inflation targets (with central bank using interest rates to control) are generally not that beneficial for that purpose, as the inflation is known ahead of time and would be priced in.

Inflating away your debt only works if you can increase the inflation to be more than what the person you borrowed from thought it would be.