Why are we being asked to pay taxes twice for pulling out of our 401ks early?

[KrisD15]

When funds are pulled early from a retirement account, first there is income tax on the income, then there is a penalty tax for making a withdrawal early. 

There are a few exceptions to the penalty, such as using it for Medical expenses. The number of exceptions for 401k is less than for an IRA. 

According to the IRS:

"Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty. There are exceptions to the 10 percent penalty, such as using IRA funds to pay your medical insurance premium after a job loss. For more information, see Hardships, Early Withdrawals and Loans."

[ee-ea]

The money that was taken when you withdrew was withholding.  It is just like the money taken from a pay check to pay taxes.