In step 1, you made `1$` as income.

In step 2, you paid a tax of 10% and remained with `0.9$`

> Now that money is yours. You don't pay taxes on that 0.9$ again.

Eventually there is a cycle, if you see for some time.... where the governments directly / indirectly pump the money back to the people and then folks pay them back and the governments again get a percentage off that.

Like you said governments are going to keep getting the money more and more, and people lose money. People would be having lesser money to buy stuff. This means governments keep getting lesser chunks. They want people to make more, so that they get more (as a percentage). They print more money and pay folks even more, so that people pay even more to the government back. (I am not an expert, this is just my take on this)