Beat butter, cream cheese and dough sugar until smooth. Beat in egg and vanilla, scraping the bowl well.
Whisk flour, baking powder and salt, then mix into the cream cheese mixture just until combined. Cover and refrigerate for 1 hour, additional to the listed active time.
Heat the oven to 350°F and line two baking sheets with parchment. Divide the dough into 24 balls and roll each first in granulated sugar, then heavily in powdered sugar.
Bake one sheet at a time for 11 to 12 minutes, until the tops crack and the edges are set but still pale.
Cool on the sheets for 5 minutes, then move to racks and cool completely before packing.