There is a "quote" formatting option within Gmail, but no "unquote" to undo the deeper quote level. How do I unquote text?
Click on the A-underscore icon for the formatting buttons. The Google Support page lists the following:
Quote: Crtl + Shift + 9 Mac: ⌘ + Shift + 9 Indent Less: (ALSO UNQUOTES!) Crtl + [ Mac: ⌘ + [ Indent More: Crtl + ] Mac: ⌘ + ]
The shortcut keys also show when you hover over the icons.
If you use Chrome you can use the UnQuote for Gmail extension.