Strangely enough, the deductions for charitable contributions were still available to those "rich guys" after the tax rates were reduced. Rich guys don't become rich guys by passing up ways to reduce expenses, such as taxes. Assuming your "cousin" exists, his statement makes no sense. Further, IRS statistics disprove it. Check out the chart in this article and note the extremely sharp INCREASE in charitable contributions though out the Reagan years:
Second, why would luxury car dealers take it in the shorts? Those "rich guys" had more money, right? Surely that would be a boon for luxury car dealers, not the other way around.