Then the Pharisees went and plotted how to entangle him in his talk.  And they sent their disciples to him, along with the Herodians, saying, "Teacher, we know that you are true and teach the way of God truthfully, and you do not care about anyone's opinion, for you are not swayed by appearances.  Tell us, then, what you think. Is it lawful to pay taxes to Caesar, or not?"  But Jesus, aware of their malice, said, "Why put me to the test, you hypocrites?  Show me the coin for the tax." And they brought him a denarius.  And Jesus said to them, "Whose likeness and inscription is this?"  They said, "Caesar's." Then he said to them, "Therefore render to Caesar the things that are Caesar's, and to God the things that are God's."  When they heard it, they marveled. And they left him and went away. Matthew 22:15-22 (ESV)
Render on to Caesar the things that are Caesar’s, and to God the things that are God’s. Jesus shows himself to be cunning. He avoids getting trapped. He won’t say either that it is lawful or unlawful, but he re-frames the question, and answers in such a way that it makes logical sense to everyone.
But in answering the way he did, he introduced a concept that was foreign to Judaism, but reconciled a harsh fact they had to live with. In Judaism there was no concept of a separation between church and state. At least there was no thought that church and state should be separate. This is part of the reason the life of Israel was so heavily dependent on the faithfulness or unfaithfulness of the kings.
Only after the exile, when Israel never is given total freedom do you start to see the worship life of the Jews take on a life separate from that of the governing authorities. It was a reality that began even during the exile which can be seen in the life of Daniel and others. These were the first to show that you could respect pagan authorities, and yet still worship God faithfully. But this was more or less a compromise for the faithful. Judaism longed to see a weeding of church and state again, with a faithful king. This is what they saw in the manner of the messiah. They wanted a return to the days of David and Solomon.
But the word’s Jesus utters here provide a basis for the doctrine of a separation of Church and state, the correct balance of it becomes the new Shangri-La for Christians. It also gave the church the ability to survive for the first 300 some years where it was persecuted by the state it prayed for, (and now we have Christians hesitating to pray for the president because he is of a different party.)
Render on to Caesar the things that are Caesar’s and to God that things that are God’s. Let the two of them govern each other according to their own standards, the church lives by the gospel. All we have is forgiveness