He faced a $675 million budget shortfall he inherited after taking office last November. So, Alabama Gov. Bob Riley proposed—as a matter of Christian duty—a complicated $1.2 billion tax increase, eight times the largest previous increase in this heavily religious, tax-averse state.

Voters, however, crushed the governor's proposal in a September 9 special election, with 68 percent voting against. Even the poor rejected the plan. The debate surrounding the vote has raised issues that Christians will encounter in a tight economy.

An active Southern Baptist layman and a conservative Republican, Riley shuddered at Alabama's raw tax data. Numerous counties charge double-digit sales taxes on food. And families begin paying a 5 percent income tax starting when they earn $4,600. Neighboring Mississippi, by contrast, exempts families until they earn $19,000.

Riley, drawing inspiration from the research of University of Alabama professor Susan Pace Hamill, began advocating a tax increase while cutting rates for the poor—all on theological grounds.

"According to our Christian ethics," Riley said, "we're supposed to love God, love each other, and help take care of the poor."

Critics called it the "How Would Jesus Tax Us?" plan.

But the outcome wasn't simply a matter of Christians supporting the plan versus lions opposing it. Riley's plan exposed a divide between many churches and Christian organizations on economic policy.

Christian Coalition of America President Roberta Combs flew to Montgomery, the state capital, to support Riley. At the same time, the state branch led an assault on the moral foundations of Riley's plan. Backed by the Family Research Council, the Christian Coalition of Alabama drew upon a heritage ...