Taxation in cash, goods or labor is a common duty of humanity in this world. There are some who theorize that it amounts to theft, but the Bible presumes feudal obligations. Everyone serves someone, and taxation itself is not evil.
The Pharisees resented paying taxes to a pagan emperor. Roman taxes were quite burdensome as it was, but their system of farming out tax collection made it far worse because of the generally rapacious profit motive of those who collected. Every Jew who engaged in this tax farming was considered by the Talmud equal to a thief. It became a popular notion that it was sinful to pay taxes to Rome. The average Jewish peasant knew only that it was a painful burden, and anyone wanting to stir up a little political fervor need only mention the endless taxes, levies and fees that everyone hated.
I’m sure the Pharisees felt it was a good logical trap to ask Jesus if voluntarily paying these taxes was lawful. Jesus was ready for them. It should have served as a hint when He asked for one of the Pharisees to produce the kind of coin with which one paid those taxes. It seems they didn’t hesitate to carry around and use the gold coins produced by this pagan empire, when it was considered idolatrous by the Law of Moses. Jesus rubbed it in by asking them to say whose idolatrous image appeared on the coin.
Most such coins had the face of the current Caesar, inscribed with the words pontifex maximus, which Jews considered tantamount to proclaiming Caesar as the High Priest of Rome’s polytheistic idolatry. It was a scandal that Pharisees harped on constantly, though they had no compunction about using those coins.
Technically the money belonged to Caesar; he could recall it on a whim without exchange. He was merely allowing the empire to use his money for their economic needs. It made commerce better and more stable, another blessing of Pax Romana. So Jesus said the obvious: If Caesar owns it, then don’t hesitate to give it to him. The implication is that if you enjoy the blessings of Rome, then pay Roman taxes. If you want to complain, quit carrying around Roman coins as your everyday money for commerce among Jews. Don’t be a hypocrite.
Meanwhile, God had revealed through Moses that He owned not just the money, but the nation as a whole and everything it held. Let Caesar take his gold and go to Hell. Give God your life and everything Caesar doesn’t take away. This was a slap in the face at the Talmudic notion that God was restricted in His claims. The Pharisees were notorious for finding excuses not to pay heed to the sacrificial demands of the Law, to deny charity to their fellow Jews. Instead, the Pharisees had loaded up the oral code with all kinds of demands that were far greater than the Roman burden on the people, but exempted themselves from those burdens.
The Pharisees treated peasant Jews with almost the same contempt they held for Gentiles. They seldom invested much effort in teaching the actual Scripture to them. Jesus comes along and invites these “lost sheep of Israel” to hear the truth of God’s revelation, and to heal them, as well. So you can bet the crowd listening to this exchange laughed uproariously when Jesus embarrassed the arrogant elitist Pharisees with His answer, which the inquisitors clearly had not expected.
The only reason Jehovah allowed the Romans to oppress His nation was because the Jewish leaders refused to abide by the Covenant, and kept following human wisdom instead.