Why, you ask? I'll tell you why. First off, they don't have magic. Obviously. That's the biggest reason, really. Muggles can't fix broken things with the wave of a wand. They can't make something happen in an instant, nor can they slow down an action when they want to. The other stuff is just minor stuff. Those vermin rely on giant motorized metal boxes to move from one place to another. They can't fly broomsticks. Muggles hoard broomsticks for nonsensical uses, such as cleaning, something we could accomplish with a swish and flick. They don't even have house-elves to clean up after them. Bah, as if their filth could be cleaned up anyways. Even a Cleansweep 7 can't help their case. 
Interspecies breeding with wizards is just another way for Muggles to somehow heighten their status in the world. This futile attempt at getting on our level is simply pathetic. It only causes a problem on our end, for we will have to weed out the infestation of Muggle-borns that is steadily increasing in our world. Luckily, we have an easy way to identify ourselves amongst our peers. It is called the House of Slytherin. As you all know, Slytherin was the only Pureblooded founder of our great Hogwarts. He embodies what all of us as Purebloods should strive to be. Some aspects of the Slytherin House are noted to the right. These wonderful qualities are strictly Pureblood qualities. You would never see one of these characteristics in a Muggle. Such are qualities that come only from high breeding and growing up in a proper family. 
Muggles come from disgusting beginnings, and therefore, can never rise to the class of Purebloods.