[Bostonian]

"One area where this already exists is private schooling.

In practice it leads to underfunding of public schools because the people with money are the people with political power. If their kids went to purely taxpayer-funded schools they would be higher quality and everyone would be getting a better education. (I know in the US things are a bit different, and there are are high quality public schools)."

The threat of students leaving for private school and reducing funding for public schools (since their funding is based partly on enrollment) likely causes public schools to be better than if there were no alternative.