When I wrote about the expression in 2014, it was very much an outlier. Its use by American food television personality Anthony Bourdain in an (excellent!) People.com interview suggests it may be catching on.
I’m guessing this is related in some way to our expression about a person’s being “full of piss and vinegar,” suggesting “full of themselves” or “spirited” or “confident.”
Here in England, my parents said “Taking the Mickey out of…”, meaning ‘making fun of…’ but when I left home and fell in with rough types (early 1980s), I became aware of ‘Taking the piss out of…’ as a street-credible replacement.
‘Are you taking the Mickey?’ or ‘Are you taking the piss?’ as complete sentences are the abbreviated forms, with the ending ‘…out of me/him?’ implicit.
Later, I think, came the less directly mocking usage where something is a bit much:
If I am deliberately overcharged I might say “Forty pounds! That taxi-driver is taking the piss.”
If it rains every day for 6 weeks I might say “This weather really takes the piss; when’s it going to end?”
As if to say “this is so bad, I must be being made fun of”.
There is the expression ‘to take the rise out of someone ‘ which means the same thing, but is more polite. There is also ‘extracting the proverbial urine’ for the high brow! Would the american equivalent be ‘you’re shitting me’??
“Take the mickey” is alleged to be simply rhyming slang for “Take the piss” where Mickey Bliss = piss. Problem is no one seems to know who Mr Bliss was.
I’ve heard both “extracting the Michael” and “extracting the urine” as jocular translations of these expressions into a more formal register of the language. But I tend to think “expropriating” is a better translation than “extracting”. Maybe I speak formal English more fluently than whoever first came up with those formal renditions of the slang expressions, or maybe I’m completely insane. Maybe both.
notoneoffbritishisms.com 
I’m guessing this is related in some way to our expression about a person’s being “full of piss and vinegar,” suggesting “full of themselves” or “spirited” or “confident.”
A variant: full of piss and wind.
Here in England, my parents said “Taking the Mickey out of…”, meaning ‘making fun of…’ but when I left home and fell in with rough types (early 1980s), I became aware of ‘Taking the piss out of…’ as a street-credible replacement.
‘Are you taking the Mickey?’ or ‘Are you taking the piss?’ as complete sentences are the abbreviated forms, with the ending ‘…out of me/him?’ implicit.
Later, I think, came the less directly mocking usage where something is a bit much:
If I am deliberately overcharged I might say “Forty pounds! That taxi-driver is taking the piss.”
If it rains every day for 6 weeks I might say “This weather really takes the piss; when’s it going to end?”
As if to say “this is so bad, I must be being made fun of”.
There is the expression ‘to take the rise out of someone ‘ which means the same thing, but is more polite. There is also ‘extracting the proverbial urine’ for the high brow! Would the american equivalent be ‘you’re shitting me’??
“Take the mickey” is alleged to be simply rhyming slang for “Take the piss” where Mickey Bliss = piss. Problem is no one seems to know who Mr Bliss was.
Seems plausible Mickey Bliss There is also Brahms and Liszt = pissed (as in drunk)
I’ve heard both “extracting the Michael” and “extracting the urine” as jocular translations of these expressions into a more formal register of the language. But I tend to think “expropriating” is a better translation than “extracting”. Maybe I speak formal English more fluently than whoever first came up with those formal renditions of the slang expressions, or maybe I’m completely insane. Maybe both.