1. In a medium bowl, beat butter, cream cheese, and brown sugar with an electric mixer on medium speed until light and fluffy. Beat in egg and vanilla until well blended.
2. Add flour mixed with salt and nutmeg and beat until well blended. Shape mixture into an 8-inch log. Wrap in wax paper and refrigerate 1 hour, until firm.
3. Preheat oven to 350°F. Using a sharp knife, cut dough into 1/4-inch-thick slices. Place about 1 inch apart on ungreased baking sheets. Bake 10 to 12 minutes, until cookie edges begin to brown. Let cookies cool on sheets 2 minutes, then remove to a rack and let cool completely.