I like that more properties get automatic tags now, but I think it's important to be able to distinguish the tags that might get items confiscated. I suggest something like:

Good properties: blue
Bad properties (including Damaged): orange
Military: purple
Illegal: red

Edit:
Bonuses from enhancements: green
(http://ministry.kronosaur.com/record.hexm?id=6462)

watch tv, do nothing on 8/9/2015 6:03 PM:

Damage and bad enhancements should be a different color than bad intrinsic propertiess, since otherwise players are likely to skim over intact items like Trenton field generators and worldship armor when looting. These items are balanced to compensate for their tradeoffs rather than being strictly worse.

I think red makes more sense for damaged items and items with bad enhancements (e.g. armor that's had meteorsteel paste applied), with orange for illegals and yellow or grey for bad or neutral intrinsic properties.

nms on 8/10/2015 8:59 PM:

Good points. Unfortunately we're running low on easily distinguished colors that are acceptable backgrounds for white text. Yellow is not good. Black works though.

If the text can be black for some background colors, that opens up yellow and some lighter variants of other colors, like light cyan and magenta.

watch tv, do nothing on 8/11/2015 11:18 PM:

Tag text could also be white with a black outline by default, which would permit all colors- even patterns and gradients- while maintaining consistent text color.

nms on 8/17/2015 6:36 AM:

With only white text, it could be something like:

Good inherent properties - blue
Good enhancements - green
Military - purple
Neutral attributes - gray
Bad inherent properties - orange
Damaged and bad enhancements - red
Illegal - black