Hi @JasonHill,
Since tagging is separated into custom tags (which people such as Moderators and Administrators may leverage to internally mark posts for some specific criteria) and user tags (which can be publicly assigned to content with the appropriate permissions), I think the best answer I can provide is "it depends". More on that below!
Giving users the ability to add tags on the community will only provide enhancements based on the utilization. That is, if nobody's adding tags, nobody else can find content using said tags! By itself, if tagging is encouraged it will encourage community participation and in-community search results will benefit as users will be able to find more relevant content.
As for SEO, adding public tags to posts doesn't hurt, but I can't say if there is a significant impact to external search index ranking. However, it stands to reason that since it is on pages that are being crawled by search engines, it shouldn't harm relevancy.
@PaulGi wrote a fantastic TKB article some time back that discusses public tags in greater detail:
About public tagging
Hopefully this helps!
Ted
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