Michigan no longer will offer business tax credits when a 6 percent corporate income tax takes effect Jan. 1.

But that doesn’t mean the state is leaving the incentives business behind.

The Michigan Economic Development Corp. is getting an additional $50 million from the Legislature to attract new business investment and help existing businesses grow.

Gov. Rick Snyder’s budget originally proposed $125 million for the MEDC to attract, retain and grow businesses in the state.

But the Legislature bumped that figure up to $175 million after local economic developers expressed concerns that Snyder’s proposal wasn’t large enough to allow Michigan to compete effectively in the pricey race among the states for jobs.

The extra $50 million will go mostly to business attraction efforts. It also could help the state fight a perception that it is unilaterally disarming in the economic development wars.

Under a sweeping tax overhaul approved earlier this month by lawmakers, the complex Michigan Business Tax will be replaced next year by a simpler 6 percent corporate income tax.

That represents an 82 percent cut in business taxes by the 2013 fiscal year. But the new tax also eliminates virtually all MBT credits for business locations and expansions, historic preservation and brownfield redevelopment.

Snyder administration officials say they think the big tax cut, combined with the new incentives, will allow Michigan to go toe to toe with any other state in fighting for jobs and investment.

“We’re feeling pretty good that with the resources we have, we’re in a place to do the kinds of things we need to do,” MEDC spokesman Mike Shore said.

Under new leader Mike Finney, the MEDC is putting more resources into helping Michigan businesses grow — a strategy known as economic gardening — and fewer dollars into trying to lure investment from out-of-state companies.

Gov. John Engler tried a similar tactic in the early 1990s when he eliminated state tax incentives. But the approach failed, and Engler created a new arsenal of incentive programs.

One difference between then and now is that many of the tax cuts and regulatory reforms Engler promised businesses hadn’t been enacted when he axed tax incentives, making the state less competitive for investment.

Snyder, with close cooperation from a friendly Legislature, has been able to cut business taxes simultaneously with eliminating tax incentives.

But his strategy will be tested by other states, most notably neighboring Ohio, that are accelerating their business attraction efforts.

Under new Republican Gov. John Kasich, Ohio has committed hundreds of millions of dollars in economic development funds to try to recapture the 610,000 jobs his state lost over the past decade.

Kasich recently replaced the Department of Development with JobsOhio, a MEDC-style economic development agency governed by a group of business executives.

Ohio also has a $100 million fund to close business investment deals. Snyder has said if companies want special deals in Michigan, they can go before the Legislature and ask for them.

Jeff Finkle, president of the International Economic Development Council in Washington, D.C., said Michigan likely will lose some investments to other states with more resources. But he likes what Snyder is trying to accomplish.

“It clearly is contrary to what many governors are doing,” Finkle said. “But these one-off tax incentives do tend to send a wrong message to businesses that everybody can shake down the state and bid you off against other places.”

Email Rick Haglund at haglund.rick@gmail.com.