Preheat oven to 325 degrees F. Line a 13×9″ baking pan with foil, extending the sides of the foil over the edges of the pan.
In the bowl of a stand mixer, beat together the butter and sugar until light and fluffy, about 5 minutes.
Beat in the powdered sugar and vanilla.
Add in the flour until a soft dough has formed. Press HALF of the dough evenly into the bottom of the prepared pan. Put the other half of the dough in the refrigerator.
Bake the crust for 15 minutes. Remove from the oven but keep the oven on.
Pour the caramel evenly into the crust, then crumble the remaining dough on top to cover the caramel layer.
Bake again for an additional 25-30 minutes or until golden brown and the caramel is bubbly.
Cool completely, then refrigerate for at least an hour to let it set. Cut into squares.