The daily business briefing: February 6, 2020

(Image credit: Mario Tama/Getty Images)

Jump to category:

1. China announces plan to halve some tariffs on U.S. goods
2. Ailing Bernie Madoff requests early release from prison
3. Report: TurboTax, H&R Block charged millions for tax prep that should have been free
4. Tesla shares plummet after stunning rally
5. Stocks futures rise for 4th straight day

published 6 February 2020

1. China announces plan to halve some tariffs on U.S. goods

China said Thursday it planned to cut in half tariffs it imposed last year on 1,717 U.S. goods. The move reciprocates commitments the Trump administration made under the "phase one" deal to deescalate its trade war with China. Analysts said it also amounted to an effort by the Chinese government to boost confidence and help businesses affected by disruptions and investor concerns stemming from the rapidly spreading coronavirus outbreak that started in central China. The country's finance ministry said tariffs levied on some goods would be reduced to 5 percent from 10 percent and others would be cut to 2.5 percent from 5 percent on Feb. 14, the same day when some U.S. tariff reductions are scheduled.

Bernard Madoff, jailed for the largest Ponzi scheme in history, requested early release in a Wednesday court filing, telling the court he was dying of terminal kidney failure. The document said Madoff has less than 18 months to live. "Madoff does not dispute the severity of his crimes, nor does he seek to minimize the suffering of his victims," his lawyer, Brandon Sample, wrote. "Madoff humbly asks this court for a modicum of compassion." Madoff was sentenced to 150 years in federal prison in 2009 after being convicted of cheating thousands of investors out of $13 billion. "In light of the nature and circumstances of his offense, his release at this time would minimize the severity of his offense," Ken Hyle, Bureau of Prisons general counsel, wrote in denying an earlier release request in December.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

In 2019, more than 14 million Americans paid for tax preparation software that should have been free, ProPublica reports. The IRS has partnered with H&R Block and Intuit, the maker of TurboTax, to offer Free File, and an audit by the Treasury Inspector General for Tax Administration found that few people took advantage of the program because it is "fraught with complexity and confusion." As a result, tax software companies steered taxpayers away from this free program for their paid services, and ended up making about a billion dollars in revenue, ProPublica reports. In December, the IRS prohibited tax preparation companies from hiding their free products from search engines and lifted the restriction that kept the IRS from creating its own free online filing system.

Tesla shares dropped by 17 percent on Wednesday as analysts warned the stock was priced too high after a recent rally, and senior executives said the coronavirus outbreak in China would delay deliveries of its Model 3 electric cars from its Shanghai plant. Tesla remained up by 25 percent since it reported its second straight quarterly profit a week ago. Needham analyst Rajvindra Gill recommended selling Tesla, saying in a report that its price-to-earnings multiples had risen too high. Even after Wednesday's decline, Tesla's price-to-earnings ratio is higher than Amazon's, and more than double that of Apple. "We've never seen a stock rise that much that fast with such little regard to past fundamentals or track record," Gill wrote.

U.S. stock index futures pushed higher early Thursday, putting Wall Street on track for a fourth straight day of gains on easing concerns of an economic backlash from China's coronavirus outbreak. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up by around 0.3 percent several hours before the opening bell. The Dow surged by 483 points or 1.7 percent on Wednesday and the S&P 500 rose by 1.1 percent to a record high, erasing the losses from last week's selloff after reports of a possible "breakthrough" in the search for a treatment for the virus. Still, the death toll in China continued to climb, rising by 73 to a total of 563 people on Thursday in the third straight record one-day increase.

Explore More

Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.