Beat the cream cheese and butter together in the bowl of a stand mixer or a handheld mixer on medium speed. Aim for a smooth and creamy texture, it should take about 1 minute.
Add the caramel sauce and vanilla extract to the bowl. Beat the mixture on medium speed until well blended.
Add the sugar gradually, 1 cup at a time, beating on low speed after each addition to prevent a sugar cloud in your kitchen. If the frosting is too thin, add a bit more sugar until you reach the desired thickness.
Increase the mixer speed to medium-high and beat the frosting for up to 2 minutes. This will add some air into the frosting, making it fluffy.