McCain will repeal the AMT. Wait, no ...

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NEW YORK (CNNMoney.com) -- John McCain's pledge to repeal the Alternative Minimum Tax has morphed into a promise to phase it out.

Translation: More than 4 million households would continue to pay the so-called "wealth tax" under his proposal during his term if elected. And the tax likely would remain on the books long after the presumptive Republican nominee left office.

But McCain's amended AMT policy would still end up protecting most of the folks who would be unfairly trapped by the tax, which otherwise would raise a ton of revenue from middle- and upper-middle-income families instead of the wealthy, for whom the tax was initially intended.

"I will also propose ... a phase-out of the Alternative Minimum Tax," McCain said in a speech on June 10.

That's a modification of his promise last fall, when he said, "I am committed to repealing this tax before millions of American families are forced to devote even more of their hard earned money to paying for the spending largesse in Washington."

Parts of the McCain campaign Web site still say his position is to repeal the AMT, and that's the language one of his advisers used on CNN's "Situation Room" as late as this week.

The AMT is an alternative tax structure that imposes a levy above a certain amount of exempt income. When the base for today's income-exemption levels was set 30 years ago to ensure the wealthy paid some income tax, those levels were not indexed to keep pace with inflation (see correction at end of story). And what was "wealthy" decades ago is considered middle-income today.

The exemption amount is $45,000 for couples and $33,750 for singles. But for the past 7 years, Congress has approved a "patch" that temporarily lifts the exemption levels. With a patch in 2008 - which lawmakers have yet to pass - the exemptions would be just north of $66,250 and $44,350. That change alone prevents more than 20 million tax filers from getting hit with the AMT.

According to a report released this week from the Tax Policy Center, which used numbers provided by the McCain campaign, the candidate is now proposing to permanently patch the AMT, but to do so in a way that eventually exceeds what Congress has been doing so far. Here's how:

From 2009 through 2013, he would impose a patch that increases with inflation each year, much as Congress has been doing. Then he would index the exemption amount to inflation plus 5%. Once the exemption level for married couples hits $143,000, it would then revert to being indexed to inflation.

McCain is not alone in his quest for a permanent patch. Both Democrats and Republicans say they'd like to do away with the AMT, but short of that, they at least want to protect the middle class from having to pay it.

What's stopping them from getting rid of it altogether? The AMT is a revenue machine - and the expected revenue from it is baked into official budget and deficit forecasts. So just patching it is seriously expensive: up to $1.4 trillion over 10 years, according to Tax Policy Center calculations.

But repealing it is even more so: up to $2 trillion.

Whatever McCain's reason for modifying his repeal pledge, his phase-out plan is not likely to eliminate the AMT anytime soon and certainly not while McCain holds office, even if he's elected president for two straight terms.

"Getting to that [$143,000 exemption] level takes much longer than 10 years," said Roberton Williams, one of the authors of the Tax Policy Center report. And even then, Williams said, "the AMT would definitely still exist for some taxpayers."

But at that point, presumably, the AMT would at least be hitting those for whom it was originally intended.

Correction: The original version of this story incorrectly stated that today's income exemption levels were set 40 years ago.