Of course, the reason that fallacy exists is because it works. Every argument against increased progressive taxation has been extensively focus-group tested, of course it works. But the need to consciously counter that messaging doesn't render the policy impractical.
Because when the income tax was introduced in 1913 it also was a small percentage of income only for the super rich (7% with the first 500K exempt, 1913's 500K was a bit more than 2020's 10M you suggested).
2) Framing things as a one-off tax is probably not a great idea. Once it's done once, there will be demands to go back to the trough, and it would be better for everyone to have the certainty around when and how that will work, so a proposal to have an indefinite 0.5%/year wealth tax I think makes a lot more sense than a one-time 5%. (Imagine how lucky you'd be if you become an overnight billionaire in 2021 and dodged the bullet!) Furthermore, the real net needs to help our society thrive long-term are far more than a one-time 5% billionaire wealth tax could capture. It reminds me a little of the meme that Mike Bloomberg could afford to give every American a million dollars. https://twitter.com/NorthmanTrader/status/123584359225130188...
3) Overall, a system more focused on taking wealth than creating it will itself crater. There's been a lot of dialogue roughly summed up as "eat the rich" that lays out all kinds of very exciting ways to spend money but just assumes that lots of wealth will magically get created, or that there's a fixed pie of wealth out there so we should just take it from those that have it. No, I'm not a Randian Objectivist (and yes, I've read Atlas Shrugged), I believe that society should intelligently invest in its human capital with a goal of maximizing everyone's human potential. A society that does well at that will generate lots of wealth and will have lots of good answers possible for how to share and spread that wealth. And the US is demonstrably not doing a good job at economic mobility, which is to say our branding of "anyone can make it" doesn't seem to be lining up with people's lived realities very well. So I find it less helpful to talk about "are you a bad person if you are a billionaire" and more helpful to talk about what factors are keeping portions of our society from achieving as much as they could and how we could collectively tackle these factors (or more to the OP's point, find effective ways to get out of these people's way instead of assuming we know how to fix their problems!).
4) A lot of the overall discussion about inequality decenters from the very real and tangible global progress that has been made on eliminating poverty. The data is staggering in its velocity, and wildly unreported since good news is nowhere near as exciting to link to and discuss as bad news. https://ourworldindata.org/grapher/share-of-population-livin... - but the story in the US is much more grim, with poverty on the rise, stagnation in wages, and the hollowing out of the middle class. So we can say that the world (and China in particular) is trending in the right direction toward elimination of poverty and equitable wealth generation, and the US's policies and environment are trending the wrong way. There's some data to suggest that 90's era welfare reform is to blame, see https://www.dataforprogress.org/blog/2018/12/3/jg5hvxe1e4qpf... for more on that angle.
In short - I agree suffering doesn't need to be the way of things, we should halt policies that stifle opportunity to increase social mobility, and I don't think a one-time wealth tax is a good idea or gets us to where we want to go.
Jeff owns approx $166,500,000,000 in Amazon stock, at $3000/share, and 11.5% of the company (55,500,000 million shares). Lets assume that this is where ALL his wealth is (its not).
That 5% tax on that would be $8,275,000,000. Were Jeff to sell shares to cover this, it would cost 2,758,333 shares. That would reduce his ownership of Amazon from 11.5% to 10.75%. Hardly the loss of a controlling interest.
So by what moral justification can there be for the morality of having and holding $166,500,000,000 in wealth? That government is inefficient? That he can make better investments? Who do those investments benefit? Even assuming supply-side economics works to lift all boats (it doesn't, mostly), is it more moral to lift a middle-class person into the upper-middle class, a poor person into the middle-class, both, or neither?
What I think is more likely is they just don't have to ever deal with people who are suffering, and have justified it in their minds as themselves being greater and this is the way of things. Certainly those that end up with billions of dollars at their disposal don't hold the same moral compass. And constant reminders of abject poverty haven't helped billionaires in developing countries do more to help the poor.