Like Dr. Frankenstein, Congress wasn’t out to create a monster when it designed the Alternative Minimum Tax. But for millions of middle-class Americans, that’s exactly what it has become. And experts warn there’s no easy way of pulling the plug.

The Alternative Minimum Tax, or AMT, first came about to ensure that the very wealthy pay their fair share. In 1969, it was discovered that some 155 citizens making $200,000 or more -- equal to about $1 million today -- had paid no income tax in 1966 as a result of deductions and credits.

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Congress responded by enacting the AMT, which created a new set of parameters to determine the minimum tax amount a person should pay. The new rules stripped away many of the deductions allowed under the standard income tax calculation.

In theory, the AMT rules seem fair. But there’s a major snag: The AMT exemption amount, which was originally calibrated to avoid hitting lower income people, was never indexed for inflation. Thus, as middle income salaries rose with inflation and the AMT exemption stayed the same, more and more of these middle income tax payers found themselves affected by a tax intended for the wealthy.

Tax attorney and Fairmark Press founder Kaye Thomas said the problems sharpened after changes were made to the tax laws under President Ronald Reagan. “All of our current problems stem from decisions that were made in 1986 and the failure to correct them later on,” Thomas said. Under Reagan, regular income taxes and personal exemptions were indexed to match inflation, but the AMT exemption was not, he said.

Therefore, a tax originally targeting the wealthy began hitting the middle class--and in a big way.

In December, Congress acted to address the unintended growth of the tax by passing a one-year AMT patch that reduced the number of potential AMT taxpayers from about 20 million to 4 million. But while government’s last-minute save may have spared some this year, the problem is hardly solved.

In the first place, the patch is only in place for one year and has to be revisited next year. So while less than 1% of taxpayers with incomes between $75,000 and $100,000 in 2007 will be hit by the AMT, that number could grow to 50% in 2010 if Congress fails to reapprove the patch, said Roberton Williams, a principal research associate at the Tax Policy Center.

Second, the tax has become an important source of income for the government, whose strained wallet can’t afford another hit. With the recent passage of a $168 billion stimulus package, along with rising healthcare costs and baby boomers’ increasing dependence on Social Security, the budget is facing pressure from all angles, Williams said.

“All of the budget estimates looking forward assume the AMT will be in place… There’s a high cost of undoing that,” he said.

And Williams isn’t kidding. Experts believe eliminating the AMT could tack an additional $1.3-$1.6 trillion to the deficit over the next 10 years.

There’s also the President Bush tax cuts, which lowered income tax, but left more and more people susceptible to the AMT. Any decision to extend those cuts, which expire in 2010 and 2011, could expand taxpayer exposure to the AMT.

The question of a solution is highly political. One option would raise tax rates for those in the highest income brackets. The question then, according to Thomas, is how much of an increase would be acceptable, and how much resistance would it face from Republicans.

Another option would be to get rid of state and local tax deductions that ostensibly help taxpayers, but can increase their AMT exposure. These deductions, intended to ease tax payers' burden, often trigger the AMT, especially in states where these taxes are high.

But is it fair to everyone to get rid of these deductions? Not according to Dan Caplinger, an independent financial consultant and contributor to The Motley Fool.

“For a lot of people, [those tax breaks] justified paying what they paid for housing while the market was booming,” he said. “It doesn’t really strike me as being a good solution.”

The solution is probably broader, according to Caplinger. Indeed, he believes tax policy makers may have to "go back to the drawing board."

Likening Reagan’s 1986 revamping of the tax code to having a heart bypass, Caplinger believes we have to once again untangle the nation's convoluted tax laws. The fact that the AMT seems to compete with the regular income tax calculation only compounds the problem, he said.

“The only reason the AMT really stayed around this long is because for a long time, it was hitting people with paid tax preparers who were paying a lot in taxes anyway,” he said. “But to a normal person who is struggling to make ends meet, it’s just kind of offensive… It seems so arbitrary.”

As pressure builds and a new president steps into office, the AMT is expected to remain at the forefront of policy discussion.

“Expect massive, massive legislation with in the next couple of years,” said Thomas. “One way or another, they’re going to have to do something with the AMT.”