1. In a mixer bowl, mix butter and cream cheese until light and fluffy. Add sugar, egg and vanilla. Beat at medium speed, scraping bowl often until creamy. Reduce speed to low; add flour. Beat, scraping bowl often, until well mixed.

2. Divide dough into 2 equal portions; wrap in plastic wrap and refrigerate until firm (at least 2 hours).

3. Heat oven to 350 degrees. Roll dough on parchment paper. Cut out cookies. Bake for 7 to 10 minutes or until edges are very lightly browned. Remove from cookie sheets; cool completely.