The question as to whether or not it was lawful to pay taxes to Caesar was a serious one, and it really put Jesus in a spot. If he said it was lawful, he would be regarded as a traitor to the Jewish cause and the Jewish religion. If he said it was unlawful, he could be denounced as fomenting rebellion against Rome.
In his answer Jesus implied that there need not be conflict between the demands of the State and those of God. The State has a role, but its power is limited and does not supplant God. From this principle Christians deduced that they could accommodate loyalty to the State.
Today you can find people who enjoy dual citizenship – they are citizens of two countries (I would be an example of it). However, every Christian has dual citizenship. Christians are citizens of the country in which they happen to be living or in which they were born. To it they owe many benefits. To its forces of law and order they owe the fact that they are able to live in peace and security. To its public services they owe transport, water, light, etc. In a welfare state they also owe their education, medical care, unemployment benefits, and so on, to it.
All of these benefits mean they are under obligation to the State. The legitimate State has rights, and Christians will respect those rights. They must respect its laws and rulers. They must be responsible citizens, and, as far as they are able, must play their part in making the country a good place for all its citizens. Failure to be a good citizen is a failure in Christian duty. To cheat the State is to cheat one’s fellow citizens, and to cheat one’s fellow citizens is to cheat God.
But Christians are also citizens of the Kingdom of Heaven. To it they owe certain other privileges, and to it they also have obligations. In many cases the two responsibilities do not clash. But at times they may. And when they do, Christians will spontaneously know which comes first.
However, it may not always be that simple. What Jesus gave us was only a principle. He didn’t give a detailed theory of political obligations or a blue-print for Church-State relations. Christians would have to work out the implications of it. In practice it is not always easy to say this is for Caesar and that for God. Life is a unity. It can’t be split into two clearly defined parts – the secular part and the religious part.
However, history shows unequivocally that separation of Church and State is absolutely essential. But when Jesus said, ‘Give to Caesar what belongs to Caesar’ his assumption was that Caesar’s claim would be just.
He wasn’t giving Caesar a blank check. Christians can sometimes be faced with a real dilemma – how to be a Christian in a secular world where the laws may often be unchristian.
However, true Christians will strive to be good citizens of their country, and at the same time good citizens of the Kingdom of Heaven. They will fail neither in their duty to God nor to their fellow men and women. But as Christians our first and deepest loyalty is always to God. To God alone we render worship, but in other things we gladly acknowledge and serve the secular powers, praying that they will rule wisely and justly.