There are different levels and surcharges to the luxury tax, so they can easily go over the first or second levels if they want to. Obviously they'd better not be done, but I don't think they are.
And in no world is Spencer Horwitz the "second best" hitter on a team with Vlad and Bo. I like him, but he is a 27 year old journeyman without enough power to be a full-time 1B or DH and horrific defensively at second base. This was objectively a pretty cheap price to pay for Gimenez, though Cleveland wanted to get out of that contract having just drafted 2B Travis Bazzana 1st overall, so it does make sense for both.