Retrieve all posts within tag OR category?

You need a tax_query.

$live_tags = array(
  'posts_per_page' => 5, // showposts has been deprecated for a long time
  'post_type' => 'post',
  'post_status' => 'publish',
  'tax_query' => array(
    'relation' => 'OR',
    array(
      'taxonomy' => 'post_tag',
      'field' => 'slug',
      'terms' => 'live',
    ),
    array(
      'taxonomy' => 'category',
      'field' => 'slug',
      'terms' => 'candy',
    ),
  ),
  'orderby' => 'date',
  'order' => 'DESC'
);
$q = new WP_Query($live_tags);
var_dump($q->request);

Note that both the {tax} (string) and showposts arguments have been deprecated for quite some time. I would not recommend using them.