"Your scheme would also create an entire industry of 'phony' corporations which would purchase consumption items 'wholesale' to avoid paying the taxes."
Under the FairTax, items purchased for personal consumption would be taxed, even if paid for by a corporation. That is to avoid the type of fraud you are concerned about.
"Your scheme would also create an entire industry of 'phony' corporations which would purchase consumption items 'wholesale' to avoid paying the taxes."
First, being a coporation doesn't mean anything in terms of paying or not paying FairTax. What matters is whether you have a resellers certificate number for the wholesaler to list in his reporting to the State to show why he didn't collect the FairTax.
Second, when the State compares the total value of items purchased tax-free under a particular reseller certificate and does not find the reseller sending them the final tax, it triggers an audit.
Ain't computers and databases wonderful ?