With the major caveat below, on the face of it, it doesn't seem much less arbitrary to tax by citizenship than by residence in certain cases. For instance, as someone that grew up in the US and went to public schools, I certainly used far more public resources there than in my current country of residence, and would also (as a citizen) have access to an indefinite further amount of resources such as consular representation, retirement benefits if retiring there, etc. It seems about as arbitrary to me to pay taxes in a country that I cannot unilaterally choose to continue living in, due to immigration obstacles.

However, given that the global consensus is to tax by residence, the US should absolutely change its policy to avoid the hassles due to this inconsistency.

It's possible to be a citizen of a country without having ever used any resources from it (it's also possible to have dual citizenship, which complicates things). Taxation isn't about retroactively collecting money for the resources you used during your childhood, it's about collecting money for the resources you're using today. Children, the unemployed, etc. are sponsored by the rest, they aren't taking a loan on their taxes.

The idea is that you receive the services and benefits of your US passport even when residing overseas.

Also keep in mind that you can write off any taxes paid to a foreign government so it's really just a tax on those who make lots of money in low-tax jurisdictions.

About those benefits of having a US passport, could you mention a few of them? Because I'm a US expat and wondering why I have to keep filing tax returns but receive no benefits whatsoever. A number of important examples:

Being a non-citizen in the country I live means I am at the end of the queue for vaccination, while the US State Dept says it won't arrange for vaccinations of US expats, but countries like France and China are doing it for their citizens.

I can't maintain a bank account in the US because without a US mailing address the banks simply refuse to provide me services. The US government could care less, has no requirement that banks provide services to US citizens overseas.

I'd consider the services provided by the US Department of State and the US Military to have some value for American expats.

The US is one of two countries that does it. California wants to levy a similar thing for people moving away from there