> The government here (Spain) knows the money I make just as any government knows about its citizens.
The problem the IRS is trying to solve is collecting taxes on money they don't know about. For example, if you sell illegal drugs, you should be paying tax on that income. But obviously you don't report to the government the amount of illegal drugs you sell. So they can't just send you a bill for your taxes.
It is odd that every American has to suffer for this obscure corner case, but they probably lose a lot of revenue if they stop taxing drug dealers, so here we are.