My take is that its harmful to label and then use that label to dehumanize a group of people.

This we agree on and is really the crux of what I’m saying. I’m not using the term Nazi to dehumanize people, I’m labelling people as Nazis because they align with that ideology. It just also happens that being a Nazi is a bad thing. With your other examples, nobody was a witch, yes there were communists and Jews and bad people used those labels to demonize them even though they weren’t bad because of those traits (there are certainly bad communists and Jews). If Hitler just said, “they’re Jews” but didn’t then vilify them, then the label isn’t bad or wrong, it was the intent behind it’s use.