Imagine if the mafia went around to collect protection money from business owners and then spent tiny percentage of that money funding various projects, many of which went nowhere and there are some projects that benefit their victims.

This is the setup you're in with the government. Wealthy people pay most of the taxes and support the government system. Tiny percentage of their confiscated wealth was apparently used to create the internet. Government was simply a middleman just like they are a middleman between people and construction companies when it comes to building roads.

People could have come together to create a non-profit that would do some basic research into various things. They could've pooled their money and paid for it collectively. However, you are already taxed, so why not use those funds to create an agency inside the government and do the same thing?