This chapter addresses the causes and consequences of automatic cross-border exchange of taxpayer information (AEI). First, we argue that the introduction of AEI was enabled by the willingness of the United States to exert its superior economic power. Second, we find that AEI leads to shifts of international investment out of tax havens, while at the same time very sophisticated tax evaders have been able to use loopholes in the AEI regime. Third, we focus on the impact of AEI on domestic tax policies and show that AEI removes the pressure of international tax competition and enables governments to increase taxes on internationally mobile capital. International cooperation in the form of AEI increases the domestic policy space of governments under conditions of economic globalization and may enable a return to more progressive tax systems and a reversion of the trend of rising income and wealth inequality.