Consider the example of the engagement diamond. The rule of thumb in the jewelry industry is that a man should spend two months’ salary on it, the idea being that it wouldn’t be an effective way to signal commitment if it cost substantially less. (“I present thee with this $15 cubic zirconium as a symbol my love and dedication!”) But there’s no need to waste scarce resources digging deeper in search of bigger stones in order to signal purchasing power or strength of commitment. If we taxed diamonds at 200 percent, for example, a man earning $1500 a month could signal the same strength of commitment by giving his fiancée a diamond with a pre-tax price of only $1000 instead of the $3000 he’s now expected to spend. And the resulting tax revenue could be used to repair crumbling roads and bridges. The same point applies to oversized mansions and multimillion-dollar coming-of age parties, to mention just two of the many conspicuously wasteful ways in which people of means signal their position in the social hierarchy - http://evonomics.com/why-libertarians-should-embrace-many-forms-of-government-intervention/