RSUs issued by a private company are not income because they are completely illiquid. Taxing RSUs at vest makes no sense because their value could change after

RSUs issued by a private company are not income because they are completely illiquid. Taxing RSUs at vest makes no sense because their value could change after they vest but before they are converted to liquid equity. In practice what this means is that maybe you get granted $1 million in RSUs by the private company you work for and pay hundreds of thousands of dollars in taxes. The private company goes bankrupt and never goes public or get acquired and the RSUs become worthless. You don't get those taxes back and you never got the $1 million.