Michael's objective was to call in Moe's debt to the Corleones (they gave him a "big chunk of money" to finish his hotel), and to plant a major stake in Nevada. Had Moe accepted Michael's offer with no protest, I think Michael would have let him survive in the interest of avoiding violence that might have impinged on his upcoming campaign to look "respectable." But it was Moe's refusal that gave Michael no choice but to kill him. If Moe had caved with no protest, Michael would appear to the others in Vegas as a man to be feared. Since Moe didn't cave, Michael had to kill him--and then the others would fear him.