The proposal is that the employee will have to pay tax on RSUs upon vest, even though the underlying assets cannot be sold. For example: Employee A has 40,000

The proposal is that the employee will have to pay tax on RSUs upon vest, even though the underlying assets cannot be sold. For example: Employee A has 40,000 shares of stock granted upon hire, vesting 25% per year. So on year 1, they vest and have to pay taxes on 10,000 shares. Say those shares are valued at $25 per share. In a public company, you could just sell $25 of those shares and be left with 7,500 shares. At the private company, under the new rules, you'll have 10,000 shares that you cannot sell, but still be liable for paying tax on $250,000. Those shares may never be liquid, and this rule can and will bankrupt people.