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I'm not sure I would go so far as to call it a red herring. It's overblown a bit, but it is interesting how blatantly hypocritical he has been. I mean to attack Obama for not paying enough taxes when he pays less? These are deep character flaws.
But also, and I'm not one to subscribe to class warfare, this is exactly the thing that so many people have been complaining about. To reveal that Trump has been hiding that he hasn't paid taxes while living a life of luxury is just exactly what folks on the left have been yelling about for year and years. And it turns out he was covering up that he was doing exactly what they were accusing him (and others like him) of doing. It's not the "look" you wanted if you were the GOP. You'd much rather that it turned out he was paying way more than his share (which was what we were all led to believe).
It's just a complete lack of transparency and moral fiber, and plays directly into the narrative of his opponents.
I think it's a red herring in the sense that the only people it matters to are people who were already vigorously opposed to Trump. It changes nothing from the status quo. His supporters are fine with his hypocrisy, as long as they're on the winning side. They're fine with the story that him dodging taxes is just smart business.
It absolutely plays into the narrative of his opponents, and it's a narrative that has repeatedly been shown to be unconvincing to his supporters. They do not see these things as issues; they see them as either trivial nonsense or as positive traits. A little tax avoidance doesn't even make the top twenty of dodgy stuff he's been involved in as President. Ultimately, it just doesn't really matter.
And I think this is the mistake that people opposed to Trump are making. They see more things that they think are outrageous character flaws, thinking that surely this will be the thing to convince Trump supporters that he's no good. That bridge was crossed a long time ago. Arguably before the election in 2016, definitely by the time we reached impeachment. Trump's character flaws were well known, and while they've become perhaps more obvious they haven't really changed.
What is required to change the mind of a Trump supporter is evidence of him doing something truly against their deeply held beliefs. For example, I think a lot of Trump supporters are truly patriotic, in that they believe sincerely that what he does is the best for the country. If he were to be shown to be doing something that was unequivocally treasonous, I'd like to hope that they would be on the front lines in turning on him.
Until that day, I think we have to accept that we now live in a world where something like Watergate would not be anywhere near enough to take down a President. Trump could admit to having people break into the DNC tomorrow and it would do absolutely nothing to him.