In my observation, private schools (outside the most ritzy ones) are usually VERY hesitant to remove students because they can’t afford the revenue loss while public schools get the same money either way.

The ability to separate good students (regardless of financial or ethnic background) so they can learn without disruption from kids not wanting to learn is a huge positive. Lots of brilliant kids are held back by the terrible schools they are forced to attend. This would provide much better equality of opportunity.

The sort of private schools who retain lots of disruptive poor performers because of the money aren't the sort of private schools that perform well as schools. My statement that "private schools all [kick out bad students]" is an oversimplification because some private schools definitely specialize in admitting bad students from rich families. But those schools of last resort aren't the schools that are sought after by anybody who could instead send their children to a school with strict behavior and performance requirements. The desirable private schools are selective because being selective makes them desirable.

But at American public schools? A student flunking so hard they have to repeat a grade, once a fairly common occurrence, has become almost unheard of because turning a blind eye to misbehavior and performance has become the path of least resistance to each individual teacher and administrator. School administrators have no incentive to maintain the school's reputation because the school's reputation was never important in the first place. They don't have to sell parents on the merits of the school because they get incoming students and funding by default. The teachers who try to uphold standards get beaten down by the system, crushed with mountains of paperwork and are accused of being the reason that student behaves poorly. And so you get American public school systems where half the graduating students are functionally illiterate and everybody in the system pretends not to notice.