President Donald Trump in the Oval Office of the White House in Washington, DC.

President Donald Trump is considering bypassing Congress to cut capital gains taxes by changing the way they are calculated, Bloomberg reported Thursday, citing people familiar with the matter.

Under the plan, profits on investments would be indexed to inflation, Bloomberg reported. This would slash taxes primarily for wealthy investors selling assets like stock or real estate by not taxing income based on appreciation from inflation.

The change, which Bloomberg said would be enacted through an executive order or rule change, would likely face legal challenges. Administration officials are split over whether to pursue it, the report said.

The White House has not yet consulted the Justice Department on the legality of such a move, Bloomberg said.

The White House, Treasury, and Department of Justice did not immediately respond to CNBC's requests for comment.

The Internal Revenue Service declined to comment.

Trump's chief economic advisor Larry Kudlow is a longtime proponent of lowering the capital gains tax, claiming it would raise revenue. Kudlow has reportedly floated the idea of cutting the tax through an executive order, according to The Wall Street Journal.

@larry_kudlow: Yup, lower capital gains tax rate raises revenue. But CBO & JTC never score it that way. Growth incentives matter.

Treasury Secretary Steven Mnuchin told the Journal last year that the administration does not have a position on indexing capital gains, but he indicated openness to it.

"There's obviously a benefit to taxpayers because it lowers the tax," he said. "There's obviously a revenue impact associated with that."

Advocates of the plan within the administration are pushing to move forward prior to the 2020 presidential election, according to Bloomberg.

President George H.W. Bush's Treasury Department considered cutting the capital gains tax without Congress in 1992, but the department's lawyers said the government did not have the authority to do so, according to the Journal.

Several 2020 Democratic candidates, including Sens. Bernie Sanders, Amy Klobuchar and Corey Booker, support raising the capital gains tax.