Preheat oven to 375F and line a baking sheet with parchment paper or a silicone mat.
In the bowl of a stand mixer fitted with the paddle attachment (or in a large mixing bowl with an electric hand mixer), combine butter and cream cheese, beating until smooth.
Add powdered sugar, mixing to combine.
Add egg and vanilla extract, mixing until fully incorporated, scraping down the sides of the bowl as needed.
In a separate small mixing bowl, whisk together flour, baking powder, and salt.
With the mixer on low speed, gradually add the flour mixture to the wet ingredients, mixing only until a soft dough forms.
Scoop out rounds of dough with a small cookie scoop. Roll each dough ball in damp hands until smooth. Place on prepared baking sheet (I can usually easily fit 12 on a baking sheet).
Bake for about 10 minutes, until bottoms of cookies are turning golden-brown and the tops no longer appear wet. Remove from oven and transfer to a cooling rack to cool completely.
Once cool, dust with powdered sugar, if desired, and serve.