I do not think that the government has any business taxing people in attempt to curve luxury. If anything wouldn't a luxury tax just build one's ability to signal because they could probably afford it? Also what would be the point of the tax? To make people happier by making them more equal commercially?

I think the history of an object definitely plays a role in our desire for it but I think you can argue that desiring a certain history surrounding an object is just a reflection of signaling. Unless an object has sentimental value, its history is another method of signaling. People probably want JFK's golf clubs partially to say that they have JFK's golf clubs.

I think honesty is the most important factor in people not buying sham Rolexes but not necessarily honesty to ourselves. If you're wearing a fake Rolex and someone asks whether or not its real then you have to either get caught up in a lie or admit that it's fake. Admitting that it's fake would in many cases provoke shameful feelings, especially if the person asking has a real Rolex, and force you to answer some internal questions; why did you buy a fake Rolex? Because it's a high quality watch or because you wanted to seem like somebody that can drop 30k on a watch?