While liberals tend to believe that changes to the tax code determine how generous Americans are, the crucial factor is disposable income. After all, charitable contributions have held steady at about 2 percent of GDP for at least four decades, regardless of whether the top tax rate was 70 percent or 28 percent. When the rate was higher, the value of the charitable deduction would have been higher, but that didn’t seem to influence overall giving. Giving USA data show that in 2014 and 2015, these contributions amounted to 2.1 percent of GDP—just above the 40-year average of 1.9 percent.

A key reason that the wealthy are making a larger percentage of donations is that the middle class is having more trouble affording them.

From stagnant wages to the rising costs of health care and housing, ordinary Americans are finding discretionary income harder to come by. But these aren’t problems that tax loopholes for charities will fix; they need to be solved by increasing growth and reducing health-care costs. Cuts in tax rates for the middle class might help, but reductions in the corporate tax rate, like the one that the president has proposed, will bring capital back to the U.S. and free up money for investment in businesses, higher wages for workers—and more money for philanthropy.

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