there may not ever be a "canon" reason for it, or even if Paige in fact cut it off herself. I like the idea that every time someone asks about her tail she gives a completely different explanation, as if she herself can't remember how it happened. it's just part of her legend, her mystique.
here's another bit of Paige's tail lore: she keeps it bandaged because the wound healed badly, and the end is now an ugly little knot of scar tissue that she's self-conscious about.