I honestly don't understand why #2 is bad. Can you please explain the logic and values behind your reasoning? No irony here, just a desire to learn.

Because it drives inequality. We're proposing a policy that explicitly benefits large owners of capital over small ones.

Inequality is a natural outcome of capitalism, and critically it will get worse without limit unless there is significant policy intervention (ref. Capital in the Twenty-First Century). Existing progressive income taxes are not sufficient, even in Europe where they are far more aggressive. So from a policy perspective, this is exactly the opposite of what is desired.