Recently saw that episode, definitely do not remember him saying that
I recall him getting upset about her wanting to cut her hair. But I don't recall him actually saying that either.
I'm watching it now. John definitely says it . Erin is holding Olivia's hair up and says "you'd cut your hair? Daddy would just...." John walks in and says "break your neck" He then stands in front of her and says "Don't cut your hair"