Raised paper hat once, concealing one form of discrimination (7)
I believe the answer is:
elitism
'form of discrimination' is the definition.
'raised paper hat once concealing one' is the wordplay.
'raised' is a reversal indicator.
'paper' becomes 'ms' (abbreviation for manuscript).
'hat once' becomes 'tile' (old-fashioned term for a hat).
'concealing' is an insertion indicator.
'one' becomes 'i' (roman numeral).
'ms'+'tile'='mstile'
'mstile' placed around 'i' is 'msitile'.
'msitile' backwards is 'ELITISM'.
(Other definitions for elitism that I've seen before include "Government by select group" , "Practice of favouring the best people" , "Advocacy of select group" , "Superior attitude of those in power" , "favouring the top people" .)