Here is a simpler answer that worked for me.
First, per a Python Dev's comment above, setuptools is not required:
package_data is also available to pure distutils setup scripts
since 2.3. – Éric Araujo
That's great because putting a setuptools requirement on your package means you will have to install it also. In short:
from distutils.core import setup
setup(
# ...snip...
packages = ['pkgname'],
package_data = {'pkgname': ['license.txt']},
)