In a medium bowl whisk together the flour, baking powder, baking soda and salt until blended; Set aside.
In a food processor combine 1 ⅓ cups granulated sugar with the zest from 2 lemons. Process until the sugar is yellow in color with small flecks of zest. If you don’t have a food processor, combine the sugar and zest in a bowl and work the two together with your fingers until the zest is broken up and the sugar is bright yellow.
In a large mixing bowl combine the lemon sugar, cream cheese and butter. Beat until lightened and creamy. Add the egg, egg yolk, vanilla and lemon juice and mix on low until blended. Scrape down the sides and bottom of the bowl. With the mixer on low, add the flour mixture in three additions blending just until the flour disappears. Scrape down the sides and bottom of the bowl and blend again.
Cover and refrigerate the dough for a minimum of 1 hour or overnight.
Preheat oven to 350°F. Line a baking sheet with parchment paper and set aside.
Pour ⅓ cup granulated sugar into a shallow bowl for coating the dough balls; set aside.
Using a small cookie scoop, portion out 1 ½ tablespoons of cookie dough. Roll the dough into a ball, then roll the ball in granulated sugar. Place the dough balls 2-inches apart on the (cool) prepared baking sheet. Once the cookie sheet is full, bake the cookies for 10-12 minutes. The edges should be set and barely beginning to brown. The bottoms should be light brown. Transfer the cookies to a wire rack. Cool completely before storing in an airtight container.