Yes that is why. To encourage reinvestment by corporations and charity by individuals -- the things that decrease taxable income.

+Nila Jones I totally missed your comment (not sure why).

I'm not convinced that decreasing income, increases charity.

You keep the same income, but if you use part of it to invest in a business or give to charity, then the taxable portion of your income is less.

But if they don't tax me, the charitable portion of my income increases.