Completely legal and safe to do so. The car has to be insured, permits ok.
Besides the regular tow bar, a safety chain is manditory.
You also have to have working lights on the back of the car, functioning with the tow vehicle. If you are going to do it often with the same car, I'd rig up a wiring harness in the front of the Bug so you could make the Bug's tail lights work off the electrical system of the tow vehicle, provided they are the same logic. Otherwise a light bar temporarily attached will do. I know of many who only occationally tow their car and get away with no extra lights simply because they haven't been caught yet. You might get away with it if you are towing a narrow Bug with a big ass F-350 4x4 where the truck's lights are clearly visible at all times.