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Monthly Archives: August 2013

Opinion »

Andrew Bird: Puzzling Through (A Love Song)

If you can succinctly explain what your song is about before you’ve written it, it may not be worth writing.

The Acxiom Corporation, a marketing technology company that has amassed details on the household makeup, financial means, shopping preferences and leisure pursuits of a majority of adults in the United States, knows that Mr. Howe is 45, married with children, the owner of a house in the 2,500-square-foot range, and is interested, among other things, in tennis, domestic travel, cooking, crafts, sweepstakes and contests. Those intimate details, Mr. Howe says, are entirely accurate.

“I am crazy about that stuff,” he says of the sweepstakes and contests.

Mr. Howe is one of the first Americans to get a detailed glimpse of his own marketing profile because he happens to be the chief executive of Acxiom. But most consumers never learn the specific pieces of information that have been compiled about them by marketers.

That is about to change. Acxiom, one of the most secretive and prolific collectors of consumer information, is embarking on a novel public relations strategy: openness. On Wednesday, it plans to unveil a free Web site where United States consumers can view some of the information the company has collected about them, just as Mr. Howe did.

The data on the site, called AbouttheData.com, includes biographical facts, like education level, marital status and number of children in a household; homeownership status, including mortgage amount and property size; vehicle details, like the make, model and year; and economic data, like whether a household member is an active investor with a portfolio greater than $150,000. Also available will be the consumer’s recent purchase categories, like plus-size clothing or sports products; and household interests like golf, dogs, text-messaging, cholesterol-related products or charities.

Each entry comes with an icon that visitors can click to learn about the sources behind the data — whether self-reported consumer surveys, warranty registrations or public records like voter files. The program also lets people correct or suppress individual data elements, or to opt out entirely of having Acxiom collect and store marketing data about them.

With about $1.1 billion in revenue in its 2013 fiscal year, Acxiom is a leading player in an industry called data brokerage. The company collects, stores, analyzes and sells consumer data with the aim of helping its clients — including well-known banks, credit card issuers, insurance companies, department stores and carmakers — tailor marketing to their most valuable current customers or identify new customers.

A credit card issuer, for instance, could ask Acxiom to help aim a campaign for elite-level cards with concierge services at people above a certain income who live in certain suburbs or drive luxury cars. To do that, Acxiom, like many of its competitors, often uses its own proprietary classification system to segment consumers into socioeconomic marketing categories, like “Frugal Families” or “McMansions and Minivans.”

Some federal regulators and privacy advocates warn that this kind of data-mining could be used to aim at consumers vulnerable to predatory lending practices, for instance, or to favor certain high-value consumers with instant, attentive customer service while relegating other people to interminable wait time.

Mr. Howe says he wants to counter such fears by making industry practices more transparent. A former Microsoft executive, he came to Acxiom as C.E.O. in 2011, bringing the online industry’s enthusiasm for data sharing to what had been a hermetic company.

“We are not going to get anywhere by hiding,” he said in a recent interview at Acxiom’s headquarters in Little Rock, Ark. “You have to make things visible.”

But AbouttheData.com is as much ruthlessly pragmatic as idealistic. Mr. Howe recognizes that regulation of his industry may be coming and that it’s better for Acxiom to be seen as a part of the solution than a part of the problem.

ONE afternoon in late August, Mr. Howe sat in an executive conference room at Acxiom’s headquarters overlooking the Arkansas River, demonstrating a version of AbouttheData.com that was still a work in progress. Having filled out an identity verification form that asked for his name, birth date, address and the last four digits of his Social Security number, he landed on a page that gave him a choice of six data categories to examine.

Visitors who log in may be surprised at the volume of information that may be available and the detailed picture it can give of their personal lives. The household interest section, for instance, listed Mr. Howe as interested in health and medical issues (he subscribes to health industry trade journals and founded a site called Health123.com); crafts (he periodically works with stained glass); woodworking (he paid for his undergraduate education at Princeton in part by working as an apprentice carpenter); tennis (he was on his high school team); gardening (his wife subscribes to Fine Gardening magazine); and “religious/inspirational.”

“I don’t know how inspirational I am,” Mr. Howe said. “I am Methodist. My uncle is a Methodist preacher. I go to church very regularly.”

But consumers, he said, should not expect all information to be current or correct. For instance, the site listed Mr. Howe as the father of two; in fact, he is the father of three. It had also pegged him as Italian, but he is actually of Norwegian descent. (The system predicts likely ethnicity based on surname and is clearly imperfect.)

The home section, meanwhile, which listed such details as the year his house was built and its estimated market value, had incorrect information about his mortgage. “I don’t have a loan on my house anymore. It’s drawing on old data,” Mr. Howe explained. “That’s one I would absolutely go in and change.”

Another memorable moment for me happened roughly six years ago, when I tried Goog-411, an experimental phone service from Google. At a time when smartphones were far from ubiquitous, the service allowed people to call a toll-free number and obtain business listings by using voice commands. It was partly an effort to improve Google’s own internal software, but it left me marveling at its combination of technological brilliance and public service — completely in keeping with the company’s motto of “Don’t be evil.”

Since then, such technological good will has faded into a kind of disillusionment, and not just for me, it seems. It feels as if the promise of the tech world — its utopian ideals and democratic aspirations — has dissolved into much more selfish pursuits of power and wealth. And the promising developments or companies that do emerge are often dimmed by their flashier peers, who tend to get a majority of the attention.

Just look at Google’s impressive and much-hyped new product, Google Glass. While undoubtedly representing a technological leap, it has been criticized as a plaything for the geeky elite. And now the September issue of Vogue, in a 12-page spread, is positioning the product as a high-end style accessory.

At the same time, Google’s business practices are under intense scrutiny, with critics saying the company unfairly blocks rival search engines and advertisers.

Then there is Facebook. Over the last few years, the company has been accused of valuing profits over privacy and the public good. So last month, when its chief, Mark Zuckerberg, announced an effort called Internet.org to expand Web access in the developing world, some contended that the plan was motivated mainly by self-interest.

Also last month, it was reported that Sheryl Sandberg, Facebook’s chief operating officer, sold 2.37 million shares of company stock for $91 million. Eyes rolled when, shortly thereafter, a listing appeared online calling for an intern to work unpaid at her nonprofit foundation. (The organization has since said it will pay its interns.)

If there was a single event this summer that symbolized the perceived excess of Silicon Valley, it was the wedding of Sean Parker, the co-founder of Napster. He threw a multimillion-dollar “Lord of the Rings”-themed wedding in the redwoods of Big Sur, complete with a nine-foot-high cake and custom-made costumes for the attendees.

Evgeny Morozov, author of “To Save Everything, Click Here: The Folly of Technological Solutionism,” said that events like Mr. Parker’s wedding reflect “the kind of attitude that people find repelling.” Although it’s easy to find similar behavior in other sectors, like finance and real estate, its appearance within tech companies can be particularly galling, given the industry’s humanitarian rhetoric, he said.

“Wall Street people don’t claim to be saving the world,” he said. “They are very cynical about what they do: make money and take nice weekends in the Hamptons.” He also noted that many residents of the Bay Area, where much of the tech world is based, are struggling to find jobs and affordable housing as an influx of highly paid tech workers has pushed housing prices skyward.

In May, protesters in San Francisco — upset about rent increases — beat a piñata shaped like one of the Google shuttle buses that takes workers to the company’s headquarters in Mountain View, Calif.

Veterans of the technology world who have seen this pattern before — in the 1990s bubble that preceded the 2000-01 bust — say the outcry over the industry’s excess seems particularly loud this time around.

Maybe that’s at least partly because the tech elite has a much larger platform for bragging, preening and complaining. Popular social media sites like Twitter, Facebook and Tumblr did not exist in the ’90s, after all. Now any ill-advised photographs or posts on those sites are fair game for critics, who can fan the flames of outrage with posts of their own.

Peter Shih, co-founder of a payment site called Celery, for example, recently posted a satirical tirade against San Francisco on a blogging site that included complaints about the city’s homeless population. A storm of protest around the Web ensued; Mr. Shih apologized and the post was removed.

Mr. Morozov thinks that there may be a hint of a silver lining in recent expressions of displeasure over tech executives’ behavior. Until now, he said, the debate about the role of the modern tech industry has largely been limited to topics like online privacy.

“The virtuality of the debate has made it difficult for us to grapple with the consequences of the proliferation of the world outside of this bubble,” he said. “Now that the effects of the tech world invade the physical environment, we have to figure out the necessary philosophical and intellectual framework to deal with it.”

“We had a lot, at least 100,” Julia estimated of their inventory, which they priced at $1 to $2 apiece. Sales were impressive that night — “we made like $68,” she said.

Julia is among hundreds of thousands of youngsters — and parents — in the United States who are using Rainbow Loom. The kit consists of two plastic template boards, a hook, 24 plastic clips and 600 multicolored mini rubber bands. From it, 24 bracelets can be woven into patterns similar to those traditionally used in lanyards and friendship bracelets, but more complex and colorful.

Rainbow Loom is the invention of Cheong Choon Ng , a Malaysian immigrant of Chinese descent with a graduate degree in mechanical engineering. He came up with the idea in 2010 and began selling the kit while employed as a crash-test engineer for Nissan.

In the past year, Rainbow Loom’s popularity has soared, spurring hundreds of YouTube fan videos and scores of so-called kidpreneurs like Julia. Now Mr. Ng is overseeing a rapidly growing company that he started from his living room in Novi, Mich.

Rainbow Loom began as Mr. Ng’s attempt to impress his two daughters, Teresa, now 15, and Michelle, now 12. One afternoon, the girls were making bracelets out of small rubber bands, and when Mr. Ng tried to join in, he found that his fingers were too big. He went to work creating a wooden board with push pins, which helped improve his dexterity but was too bulky to win his daughters’ approval.

Mr. Ng persisted, adding rows of pins. “I was putting pins on two and three and four rows, crisscrossing the rubber bands and making big bracelets,” he said. Finally, the girls were hooked, and they began to use the board to make gifts for friends and neighbors.

IT was Teresa who later suggested that her dad try to manufacture and sell the loom. His engineering background, which includes product design, quality control and manufacturing experience, provided a solid foundation for the project, and his brother, Cheong Yeow Ng, an engineer and inventor living in Wichita, Kan., encouraged him to sell the product online.

As with many new ventures, the first challenge was financial. “All we had saved to invest was $10,000,” Mr. Ng said.

When he found that his budget was too small for American manufacturers, he began vetting some in China. He sank $5,000 into the molding for the template and the other $5,000 into the kit’s parts.

A shipment of 2,000 pounds of rubber bands arrived at the family’s home in the summer of 2011. Mr. Ng assembled kits after arriving home from the office at night; his wife, Tyng Fen Chan, worked on them during the day.

They had limited success selling Rainbow Loom online, and their early attempts at placing it in major toy stores fell flat. Part of the problem was that people didn’t know what to make of the newfangled toy. To educate potential customers, Mr. Ng and his daughters posted instructional videos on YouTube, and he bought Google ads to help spread the word.

In the summer of 2012, Mr. Ng’s luck changed. The owner of a Learning Express Toys store, a chain of 130 franchises, placed an order for 24 looms, and, two days later, she called to reorder. Soon, other Learning Express Toys stores were clamoring for Rainbow Looms. The key to selling the kits, it turned out, was educating buyers about how to use them. Specialty toy and craft stores were just the place for loom demonstrations and classes.

For Gary and Molly Fitzpatrick, who own two Learning Express Toys stores in Ohio and one in Michigan, the Rainbow Loom has been a boon for their franchises. “It’s a substantial portion of our business right now,” Mr. Fitzpatrick said. The kit is listed as one of the top toys of the summer of 2013 on the chain’s Web site.

The Ngs initially called on friends and neighbors to help assemble the product, but now that work is done in China. Mr. Ng, who left his job at Nissan last fall, manages a staff of 12 and rents a 7,500-square-foot warehouse near his home to handle distribution. In all, 600 retailers carry Rainbow Loom, and just over one million units have been sold at a retail price of $15 to $17 each.

The most popular state for sales is New Jersey, according to Mr. Ng. Jennifer Grisafi of Montclair said that her local swimming club was a hotbed of Rainbow Loom activity all summer and that her 7-year-old son now prefers making bracelets to playing video games. “He loves doing technical stuff with his fingers,” Ms. Grisafi said. “It’s exciting to see how creative he can be.”

Summer camps, many of which prohibit electronics, are another place where the Rainbow Loom thrived. And beyond selling bracelets instead of lemonade, children have been busily posting how-to videos online. One YouTube user named Ashley has uploaded four such videos; the most popular, in which she explains how to make what she calls “a starburst bracelet,” has attracted around 450,000 views since Aug. 1. The official Rainbow Loom videos have garnered a total of 4.6 million views.

But like any new product in a competitive market, the Rainbow Loom faces challenges, including the tendency of children’s toys to fade in popularity. To keep his brand relevant, Mr. Ng is focusing on innovation.

“I am working on new tools to make more exciting rubber bands and more bracelet patterns,” he said. “I’m also expanding into designing accessories.”

Rainbow Loom has drawn comparisons to Silly Bandz, the springy rubber bands that were ubiquitous on children’s wrists several years ago. That company’s founder has branched out into watches and other types of jewelry and has formed partnerships with brands like Angry Birds and Barbie for themed bracelets.

IF Rainbow Loom attracts imitators, the key to keeping them at bay is having “a secret sauce” that no one else can replicate, according to Bill Aulet, managing director of the Martin Trust Center for M.I.T. Entrepreneurship and a senior lecturer at the M.I.T. Sloan School of Management. Rainbow Loom’s community of enthusiasts could be just that sauce.

“If there’s a whole ecosystem around this product, and it becomes very profitable, then someone would very likely come in and buy it,” Mr. Aulet said of Mr. Ng’s company.

Aside from that possibility, Mr. Aulet said he believes that outside help will be required to expand the business.

“He’ll need muscle of some sort,” Mr. Aulet said. “He’ll need a stronger team, more money, more expertise, partnerships. The complexity goes up exponentially as he starts to go national. It’s a whole new game.”

THIS summer, the Obama administration released the President’s Climate Action Plan. It is a grab bag of regulations and policy initiatives aimed at reducing the nation’s carbon emissions, which many scientists believe contribute to global warming.

This got me to thinking: What might I do to reduce my own carbon emissions? Here are some things I came up with. Think of them as Greg Mankiw’s Climate Action Plan.

• I could buy a smaller, more fuel-efficient car.

• I could swap my traditional car for one with new technology, like a hybrid or an electric vehicle.

• I could car-pool to work.

• I could use public transportation.

• I could move closer to my job.

• I could buy a smaller house that requires less energy to heat and cool.

• I could adjust the thermostat to keep my home cooler in winter and warmer in summer.

• I could put solar panels on my roof.

• I could buy more energy-efficient home appliances.

• I could eat more locally produced foods, which need less fuel to transport.

I could go on, but by now you get the idea. Every day, we all make lifestyle choices that affect how much carbon is emitted. These decisions are personal but have global impact. Economists call the effects of our personal decisions on others “externalities.”

The main question is how we, as a society, ensure that we all make the right decisions, taking into account both the personal impact of our actions and the externalities. There are three approaches.

One approach is to appeal to individuals’ sense of social responsibility. This is what President Jimmy Carter did during the energy crisis of the 1970s. He encouraged Americans to adjust their thermostats and insulate their homes. I can still picture Mr. Carter sitting in the chilly White House, wearing his cardigan sweater.

It’s true that as a socially responsible economist, I always weigh the global costs and global benefits before pushing the ignition button on my car. (Yes, my tongue is firmly planted in my cheek.) But expecting most people to act this way is unrealistic. Life is busy, everyone has his or her own priorities, and even knowing the global impact of one’s own actions is a daunting task.

THE second approach is to use government regulation to change the decisions that people make. An example is the Corporate Average Fuel Economy, or CAFE, standards that regulate the emissions of cars sold. The President’s Climate Action Plan is filled with small regulatory changes aimed at making Americans live more carbon-efficient lives.

Yet this regulatory approach is fraught with problems. One is that it creates an inevitable tension between the products that consumers want to buy and the products that companies are allowed to sell. Robert A. Lutz, the former General Motors executive, laments that CAFE standards are “a huge bureaucratic nightmare.” He says, “CAFE is like trying to cure obesity by requiring clothing manufacturers to make smaller sizes.”

Yet another problem with such regulations is that they can influence only a small number of crucial decisions. In a free society, the government can’t easily regulate how close I live to work, whether I car-pool with my neighbor or how often I don a cardigan. Yet if we are to reduce carbon emissions at minimum cost, we need a policy that encompasses all possible margins of adjustment.

Fortunately, a policy broader in scope is possible, which brings us to the third approach to dealing with climate externalities: putting a price on carbon emissions. If the government charged a fee for each emission of carbon, that fee would be built into the prices of products and lifestyles. When making everyday decisions, people would naturally look at the prices they face and, in effect, take into account the global impact of their choices. In economics jargon, a price on carbon would induce people to “internalize the externality.”

A bill introduced this year by Representatives Henry A. Waxman and Earl Blumenauer and Senators Sheldon Whitehouse and Brian Schatz does exactly that. Their proposed carbon fee — or carbon tax, if you prefer — is more effective and less invasive than the regulatory approach that the federal government has traditionally pursued.

The four sponsors are all Democrats, which raises the question of whether such legislation could ever make its way through the Republican-controlled House of Representatives. The crucial point is what is done with the revenue raised by the carbon fee. If it’s used to finance larger government, Republicans would have every reason to balk. But if the Democratic sponsors conceded to using the new revenue to reduce personal and corporate income tax rates, a bipartisan compromise is possible to imagine.

Among economists, the issue is largely a no-brainer. In December 2011, the IGM Forum asked a panel of 41 prominent economists about this statement: “A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as ‘corporate average fuel economy’ requirements for automobiles.” Ninety percent of the panelists agreed.

Could such an overwhelming consensus of economists be wrong? Well, actually, yes. But in this case, I am confident that the economics profession has it right. The hard part is persuading the public and the politicians.

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.

Opinion »

Latitude: The Tall Tales of Cairo

The Egyptian authorities are spinning conspiracy theories to intimidate dissenters and rally the public.

The deal, which was announced on Friday and is subject to regulatory approval, would let Cumulus beef up its syndication business with programs from the National Football League, the Olympics and Nascar, as well as news and entertainment. And it represents talk shows like “Loveline ” for advertising. Clear Channel’s Premiere Radio Networks division dominates the market with major talk hosts like Rush Limbaugh and Sean Hannity.

“These transactions give us the necessary scale to provide the marketing and enterprise solutions our advertising and affiliate partners require,” Lewis W. Dickey Jr., the chief executive of Cumulus, said in a statement. “Our goal is to be the leading producer of premium audio content distributed through multiple platforms while continuing to build our broadcast platform in the top 100 U.S. markets.”

The complex deal involves four radio companies. To finance its acquisition of Dial, Cumulus is selling 68 of its stations to Townsquare Media, a broadcaster that operates mostly in small markets. Townsquare will pay $238 million for 53 of those stations.

For the other 15, Townsquare will give Cumulus five stations in Fresno, Calif., that it is acquiring as part of an 11-station deal with yet another radio owner, Peak II Holding. (To comply with Federal Communications Commission regulations, Townsquare will place three of the stations from Cumulus in trust for a future sale.)

If all the transactions are approved, which the companies said they expect by the end of the year, Cumulus will be left with 460 stations in the United States, and Townsquare with 312. CBS Radio has 126 stations, but most are in larger markets and have greater revenue.

“Cumulus wants to raise its profile in larger markets to better compete with CBS and Clear Channel, and Townsquare gets a lot bigger out of this in smaller markets,” said Tom Taylor, who writes a newsletter on the radio industry.

Developing and branding content has become critical for radio broadcasters as they face competition from satellite and digital services like Pandora. Those services are starting to become common features in new cars, radio’s traditional stronghold.

This year Cumulus brought country music back to the New York market with Nash FM (WNSH, 94.7 FM). It plans to extend the Nash brand on the radio and on other platforms. Clear Channel, too, has been heavily marketing its iHeartRadio app, which streams its stations and also has a Pandora-like custom listening feature; Clear Channel will present its third annual iHeartRadio Music Festival in Las Vegas next month.

“Players like Pandora are pushing into the car, so having other content that’s differentiated from music is a good place for them to be,” said James M. Marsh, a media analyst at Piper Jaffray & Company in New York.

The Department of Agriculture on Friday approved four Chinese poultry processors to begin shipping a limited amount of meat to the United States, a move that is likely to add to the debate over food imports.

Initially, the companies will be allowed to export only cooked poultry products from birds raised in the United States and Canada. But critics predicted that the government would eventually expand the rules, so that chickens and turkeys bred in China could end up in the American market.

“This is the first step towards allowing China to export its own domestic chickens to the U.S.,” said Tony Corbo, the senior lobbyist for Food and Water Watch, an advocacy group that works to promote food safety.

The U.S.D.A.’s decision follows years of wrangling over the issue, and comes as Americans are increasingly focused on the origin of their food.

In recent years, imports have been the source of contamination, prompting broader worries about food safety. The Food and Drug Administration just released an analysis of imported spices, showing high levels of salmonella in coriander, oregano, sesame seeds and curry powder.

China does not have the best track record for food safety, and its chicken products in particular have raised questions. The country has had frequent outbreaks of deadly avian influenza, which it sometimes has been slow to report.

Recently, an F.D.A. investigation tied the deaths of more than 500 dogs and a handful of cats to chicken jerky treats that came from China. The treats, which were eventually recalled, additionally were blamed for sickening more than 2,500 animals.

The proposed sale of Smithfield Foods to Shuanghui International, a major Chinese food processor, has added to the industry scrutiny. In July, senators from both parties questioned Larry Pope, the chief executive of Smithfield, about the implications of his company’s deal for food safety and United States employment.

Mr. Pope responded that the deal was intended to address the rising demand for meat in China and that American workers would be employed in that effort. “This means increased capacity for U.S. producers, more jobs in processing and more exports for the U.S. economy,” Mr. Pope said. “At the same time, we will continue to supply our same high-quality, renowned products to U.S. consumers.”

The poultry trade between the United States and China has been contentious for years. Under the Bush administration, the U.S.D.A. moved to allow imports of chicken from China, which has banned imports of American beef since 2003 over worries about mad cow disease.

In response, Congress blocked Chinese chicken exports. China retaliated by slapping huge tariffs on American chicken. The fight ended up at the World Trade Organization, which ruled that the tariffs were too high.

After that, the U.S.D.A. then audited Chinese processing plants, giving its approval for them to process raw birds from the United States and Canada.

Under the new rules, the Chinese facilities will verify that cooked products exported to the United States came from American or Canadian birds. So no U.S.D.A. inspector will be present in the plants.

And because the poultry will be processed, it will not require country-of-origin labeling. Nor will consumers eating chicken noodle soup from a can or chicken nuggets in a fast-food restaurant know if the chicken came from Chinese processing plants.

“We certainly don’t look forward to any more imports, but we also realize free trade is a two-way street,” said Tom Super, spokesman for the National Chicken Council, which represents big chicken processors in the United States. “We’re hoping the Chinese will look a little more favorably on our chicken products and on other U.S. agricultural imports.”

Many of those couples who fought long and hard to win that right may pleasantly find themselves paying Uncle Sam far less and may even get a refund from previous years. (But plenty of others will pay more.)

The Internal Revenue Service this week set down the rules that will cost or save a particular couple money. That will depend on how much they earn, whether both spouses are working, and whether, together, they earn too much to claim the same sort of tax-saving deductions and credits they did when they were filing as singles (many of which phase out as income rise).

The rules also begin to clarify how couples residing in the 37 states that do not sanction same-sex marriages will fare. (Warning: Filing state returns won’t be easy, but not so bad that you’ll consider moving.)

Gay couples can now plan for how their financial lives will change when it comes to federal taxes, even though big questions remain about benefits like Social Security and veterans’ benefits. The ruling applies to a broad range of tax rules where marriage comes into play, and some will result in major savings. Some couples will no longer have to pay thousands of dollars in taxes on the value of their spouse’s health insurance, something their opposite-sex peers did not have to pay. Individuals can inherit a spouse’s retirement account and other assets without any extra tax implications. Nonworking spouses will be able to open an I.R.A. on their spouse’s earnings record. And the list goes on.

“The Supreme Court opened the door to nationwide recognition of same-sex marriage, but the Internal Revenue Service swung it wide open,” said John McGowan, who heads the lesbian, gay, bisexual and transgender practice at Northern Trust.

First the best news: If you would have received a refund by filing a joint federal return, you can generally collect that money for the last three years. (Keep reading, I’ll tell you how below). If you would have owed money, you are under no obligation to pay more.

For the 2013 tax year, all legally married couples will be required to file their returns together as either “married filing jointly” or “married filing separately,” according to the Treasury and Internal Revenue Service, which announced the rules on Thursday. That’s the case even if, for instance, a gay couple legally married in the District of Columbia goes back home to Virginia where gay unions are not allowed.

Here are some answers to several questions that may be on couples’ minds:

WILL I OWE MORE TAXES OR LESS? Generally speaking, couples will pay less in federal income tax when one person earns much less than the other or does not work at all. High-income couples with two working spouses will probably pay more. That’s the marriage penalty. You’re welcome.

A married same-sex couple in which one spouse earns $100,000 and one stays at home with their child will save about $4,200 in federal taxes by filing a joint federal return, according to Pan Haskins, an accountant in Oakland, Calif., who works with gay couples.  (If the same couple lived in a community property state like California, Washington or Nevada, their federal taxes would be the same as married couples in other states, but they would pay about $600 more than they pay now.)

RETROACTIVE REFUNDS? If a couple would have received a federal tax refund had they filed a joint return, they are entitled to claim that money for three years from the date the return was filed or two years from the date the tax was paid, whichever is later, according to the I.R.S. So generally speaking, most people will be able to amend their returns for 2010, 2011 and 2012. Taxpayers should use I.R.S. Form 1040X, which will allow them to amend previous returns.

AM I OWED ANYTHING ELSE? Perhaps. Unlike straight married couples, most gay individuals with same-sex spouses who were covered by their employer’s health plan owed income taxes on the value of that coverage (unless the employer paid them for the employee, which some companies did). In addition, these workers also paid for their portion of the premium using after-tax dollars instead of being able to pay pretax and reduce their taxable income.

If you paid those extra taxes, you can claim a refund on both of those items, according to the I.R.S. (which said it would be issuing streamlined procedures to help taxpayers). So if you paid extra income taxes on, say, $3,000 worth of health insurance annually for each of the last three years, or $9,000, you could get a nice chunk of money back, depending on your tax bracket.

WHAT ABOUT STATE TAX RETURNS? If you live in a state that recognizes your union, your life just got much easier. Couples residing in places like California, Massachusetts or New York can file a joint federal tax return as well as a joint state return, just as opposite-sex couples do.

But it’s not entirely clear what will happen in each of the states that do not recognize same-sex marriage, experts said, since some states require that a taxpayer’s state return filing status mirror their federal return. “I love that state taxing authorities are having to wrestle with this,” said Patricia Cain, a professor at Santa Clara University School of Law and an expert on sexuality and federal tax law. “It does remain to be seen, but it is likely that you won’t be filing jointly at the state level” if your state does not recognize your union.

If that’s the case, filing your state tax return will become more cumbersome. Each spouse will probably need to fill out a dummy federal return as if they were filing on their own (either as single or head of household) and then transfer the information on that return to their state return, which also must be filled out as single or head of household, according to tax experts. “It will be awkward, it will be time-consuming, but not necessarily difficult,” said Nanette Lee Miller, who leads the lesbian, gay, bisexual and transgender practice at Marcum, an accounting firm.