Buffett continues to employ an array of accounting and other tricks to drastically reduce his tax liabilities. Just to name a few: Buffett has been known to buy companies and cancels their dividends to shield most of his net worth from taxable income. He has also used stock splits to buy companies to help avoid paying taxes on those buys. And, through what is called "deferred liabilities," Berkshire can get out of paying tens of billions of dollars in taxes right now. This is something Buffett himself has referred to as "an interest-free loan from the U.S. Treasury."
None of this has stopped him from calling for higher taxes on other rich people. And, it makes sense: Higher taxes on the rich, especially estate taxes, would be a major boon to Buffett's insurance and annuity businesses that help rich Americans avoid those kinds of higher taxes.
As money manager Robert Sanborn wrote four years ago: "Buffett, at his death, will most likely, relative to his wealth, be the lightest-taxed American in the history of the republic."
But this week's headlines about Buffett are all about how he's the great guy who's been paying taxes since he was a young man in 1944 to help the war effort. And you thought Trump was the master at media manipulation! If they gave out Nobel Prizes for public image building, Buffett's successful campaign to make himself look like someone who wants a fairer and more populist tax code would win that prize this year ... and every year.
That is why Trump simply should not bow to any pressure to release his tax returns based on pressure from Buffett. The "Oracle of Omaha" is smartly playing an angle here and Trump gains no positives if he suddenly looks like he's giving in to the tax-return pressure. Doing so would be like paying a ransom. Instead, he should take a page out of Buffett's book and go into much more detail about the tax loopholes he wants to close. Trump mentioned the carried interest loophole briefly in the Sunday debate, but it was only briefly and without any of the populist rhetoric and heartfelt words a more adept public manipulator would employ to rally support. He should talk more about how it's wrong for him to pay lower tax rates and wants to fix it. It probably won't work for him as well as it does for the smiley/grandfatherly-looking Buffett, but it's better than what Trump's doing now.
By contrast. Buffett knows that the key forces who can successfully sully a billionaire's reputation come from the Left. So he was savvy and wise to get on their good side by endorsing Barack Obama in 2008 and getting onto Hillary Clinton's campaign very early last year. Now the Left's extreme fear and loathing of Trump has given him another chance to appear like their ally by joining in the Trump bashing full speed ahead. He gave them lots of new ammunition this summer when he appeared at an Omaha campaign rally with Clinton. During that rally, he mocked Trump's business savvy and said a "monkey with a dart" would have done a better job investing in the stock market than Trump. But he said it with a smile and you can still be called a nice guy in America when you're bashing someone, as long as that someone is Donald Trump.
Buffett and company have laid a trap for Trump when it comes to taxes. If Trump wants any chance to bounce back in the polls, he needs to avoid it.
Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.