1Preheat oven to 350 degrees F (175 degrees C). Line two 9 inch pans with parchment paper. Sift flour, baking powder, and salt together 3 times. Set aside.
2Make caramel syrup. In a heavy skillet, heat 1/2 cup of the sugar, stirring constantly as sugar melts. Continue to cook and stir until melted sugar becomes dark brown. remove from heat. Add hot water very slowly and stir until dissolved. Set aside to cool.
3In a large bowl, cream butter with remaining 1 1/4 cups sugar until light and fluffy. Add eggs one at a time, beating thoroughly after each. Add vanilla and 3 tablespoons of the caramel syrup. Add flour mixture and milk alternately and beat until smooth.
4Pour batter into two 9 inch pans. Bake at 350 degrees F (175 degrees C) for 25 to 30 minutes, or until a toothpick inserted into cake comes out clean.