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Assemblyman Brian Nestande stepped down as Assembly Republican Caucus chairman today after voting to support controversial legislation to raise taxes on some out-of-state corporations.

The move came one day after the Palm Desert Republican cast the only GOP vote in support of Assembly Bill 1500, by Speaker John A. Pérez, a measure to alter corporate tax law in a way that would generate an additional $1 billion per year from out-of-state businesses.

"Today I am stepping down as Republican Caucus Chair," Nestande said in a prepared statement. "I cast a vote yesterday as the only Republican to level the playing field for California businesses."

Nestande's statement cited more than a dozen other states, some with Republican governors, that have adopted a similar corporate tax policy, known in California as the "single sales factor."

Nestande, who as caucus chairman was top lieutenant to Assembly Republican leader Connie Conway, declined to discuss in an interview today whether he was asked by or forced by her to step down.

"I understood the ramifications when I took the vote," he said simply.

Many Republicans blast SB 1500 as a billion-dollar tax hike on businesses, but supporters say it would provide incentive for corporations to locate in California and would level the playing field for businesses in the state to compete with firms located elsewhere.

Current law allows companies to choose the more beneficial of two tax formulas - one based solely on sales in California in proportion to sales elsewhere, the other accounting for sales, payroll and property in California.

Nestande's vote helped Pérez secure the two-thirds supermajority needed for passage of AB 1500. If the bill clears the Senate and is signed into law, the billion dollars it generates would be used for college scholarships.

Nestande said that imposition of the single sales factor is supported by the California Business Roundtable, which includes 21 of the largest California-based companies.

"I put forward my vote in good faith that in its final form, this bill will be part of a comprehensive regulatory reform package to put Californians back to work," he said. "With my vote yesterday I decided to take the side of my constituents and California businesses."

In voting for AB 1500, Nestande said, he understood it to be part of a package of regulatory reform bills to be proposed soon. If that does not happen, he said, he will not support AB 1500 if it returns from the Senate for concurrence in amendments.

Perez applauded Nestande today as a "thoughtful and dedicated public servant" whose votes "reflect his principles."

"He took a stand on behalf of tax fairness for California's businesses and for providing critical relief to California's middle-class families," Perez said in a prepared statement. "And I believe this kind of leadership should be practiced by every member of every party."

* Updated at 1:10 p.m. to add Brian Nestande's quote that he understood the ramifications of his vote, and that he understood AB 1500 to be part of a regulatory reform package of legislation that has not yet been proposed. Updated at 2:30 p.m. to add quote from Assembly Speaker John A. Perez.


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