Your point is good in theory, and would work in a home school environment, but even kids that flunk the tests are still promoted. The test would only be valuable if it was used for a purpose that benefitted the child, instead of the wallets of the test companies.
Any employer knows that grades, diplomas, and degrees are meaningless; illiterate graduates have no role in this economy, so the government just forces companies to hire them under threat of lawsuits. Social promotion has been exposed, and business reacted accordingly; passing these inadequate students does them no favors. They just end up with a false sense of worth, followed by frustration when nobody has any use for them...