There are lots of problems with the way research is currently funded. But replacing the current system completely, or mostly, with prizes has an issue that I've

There are lots of problems with the way research is currently funded. But replacing the current system completely, or mostly, with prizes has an issue that I've not seen discussed, and that is the social/organizational aspects of it. In order to fund the work (that might lead to winning), a pool of money will be needed. Where does that pool come from? One way would be tax the winners. If, say, 1 in 20 efforts wins, this tax will need to be quite high. If too high, however, then you've essentially negated the "prize" aspect of it. Then, within the institution, there will need to be internal competitions as to see which proposal(s) gets the funds to go after a prize.